ethereum (eth) continues to underperform against bitcoin (btc), as the second-largest digital asset by reported market cap hit new multi-year lows against the leading cryptocurrency.
ethereum Continues to Underperform bitcoin
Today, ethereum's native eth token fell further against btc, posting a low of 0.0365 and erasing all of its gains against bitcoin since April 2021. This multi-year low against btc will surely dampen permabull expectations of eth.
In December 2021, eth reached a local high of 0.0865 against btc. However, since then, the smart contract token has been on a continuous downward trajectory, falling almost 58% against the leading digital asset.
Notably, the last green monthly candle that eth posted against btc was in May 2024. It is highly likely that by the end of October, eth will have posted five consecutive monthly red candles against bitcoin.
Year-to-date (YTD), eth is down over 30% against btc. Interestingly, in the last three months, the eth/btc trading pair has declined by more than 22%, indicating that the significant losses against btc are more recent.
While several factors could be blamed for eth's lackluster price performance, a major reason is rapidly increasing competition from rival smart contract blockchains like Solana (SOL).
The chart below shows that SOL has been on an upward trajectory against eth after a brief consolidation in June 2024. So far this year, SOL has posted gains of almost 60% against eth. At the time of writing, the SOL/eth ratio is trading near a new all-time high (ATH) at 0.069.
What is holding eth back?
Although ethereum adoption continues to grow, fueled by the recent ethereum exchange-traded fund (ETF) approval by the US Securities and Exchange Commission (SEC) – the effects are not fully reflected in the price action of the native eth token.
A recent report discovered that over 34 million eth (about 30% of its supply) is currently at stake. Despite lower circulating supply as a result of staking, the price of eth continues to perform poorly against other digital assets.
Furthermore, the extraordinary growth witnessed by ethereum's layer 2 (L2) solutions such as Optimism, Arbitrum, and Base has diverted attention away from the smart contract platform. In August, Justin Bons, founder of Cyber Capital saying “ethereum is dying as L2 dances on its grave.”
Despite the growing pessimism towards the price action, eth whales remain unfazed as continue to obtain more tokens to benefit from possible future price appreciation. Recent analysis found that ethereum whales now control around 43% of the total eth supply.
Similarly, earlier this month asset manager BlackRock was found to be sale its btc holdings for eth, suggesting the company's bullish outlook on the token. At press time, eth is trading at $2,532, up 0.2% in the last 24 hours.
Featured image from Unsplash.com, charts from TradingView.com
