The cryptocurrency market has been under intense bearish pressure over the past few weeks, with several large-cap assets, including bitcoin (btc) and ethereum (eth), struggling to turn things around. The past week was particularly drab for the two largest cryptocurrencies, as they posted double-digit losses over the past seven-day period.
While btc’s price performance has cooled off over the last two quarters of 2024, the flagship cryptocurrency is still outperforming ethereum in terms of market action. While some of this can be attributed to eth’s own disappointing performance over the past few weeks, a blockchain analytics firm has offered insight into the dynamics between bitcoin and ethereum.
This is why bitcoin is outperforming ethereum: CryptoQuant
In its latest report, CryptoQuant twitter&utm_medium=sns&utm_campaign=dashboard&utm_content=crypto-weekly-report” target=”_blank” rel=”noopener nofollow”>Discussed ethereum’s performance relative to bitcoin over the past few years. According to the platform’s data, ethereum has underperformed bitcoin by 44% since The Merge, an event in 2022 that saw ethereum (previously a Proof-of-Work blockchain) transition to a Proof-of-Stake (PoS) network.
At the time of writing this article, TradingView data The eth/btc price is currently hovering around $0.04122, its lowest level since April 2021. eth’s disappointing performance against btc has persisted despite the recent launch of ethereum spot exchange-traded funds (ETFs) in the United States. In fact, the eth/btc pair is down 18% since the approval of the funds.
<img decoding="async" class="aligncenter wp-image-320037 size-large" src="https://technicalterrence.com/wp-content/uploads/2024/09/Bitcoin-Outperforms-Ethereum-by-44-Since-Merger-Here-Are-the.png" alt="bitcoin” width=”980″ height=”539″ srcset=”https://bitcoinist.com/wp-content/uploads/2024/09/Screen-Shot-2024-09-07-at-03.31.27.png?w=1746 1746w, https://bitcoinist.com/wp-content/uploads/2024/09/Screen-Shot-2024-09-07-at-03.31.27.png?w=640 640w, https://bitcoinist.com/wp-content/uploads/2024/09/Screen-Shot-2024-09-07-at-03.31.27.png?w=768 768w, https://bitcoinist.com/wp-content/uploads/2024/09/Screen-Shot-2024-09-07-at-03.31.27.png?w=980 980w, https://bitcoinist.com/wp-content/uploads/2024/09/Screen-Shot-2024-09-07-at-03.31.27.png?w=1536 1536w, https://bitcoinist.com/wp-content/uploads/2024/09/Screen-Shot-2024-09-07-at-03.31.27.png?w=750 750w, https://bitcoinist.com/wp-content/uploads/2024/09/Screen-Shot-2024-09-07-at-03.31.27.png?w=1140 1140w” sizes=”(max-width: 980px) 100vw, 980px” data-recalc-dims=”1″/>
Source: twitter&utm_medium=sns&utm_campaign=dashboard&utm_content=crypto-weekly-report" target="_blank" rel="noopener nofollow">CryptoQuant
According to CryptoQuant, ethereum’s slow performance against bitcoin can be associated with its relatively weaker network activity. For instance, the ethereum network’s total transaction fees have seen a sustained decline following the Dencun upgrade. Meanwhile, the relative transaction count has fallen to a multi-year low of 11.
Furthermore, supply dynamics have not been particularly favorable for ethereum compared to bitcoin. CryptoQuant highlighted that the total supply of Ether has been growing steadily since early April, shortly after the Dencun upgrade. Coincidentally, bitcoin completed its fourth halving event in April, which reduced miner rewards from 12.5 btc to 6.25 btc.
Moreover, investors have shown a preference for bitcoin over ethereum. This fact is supported by the decrease in the relative spot trading volume of eth to btc, which has dropped from 1.6 (i.e. the spot trading volume of the former was 1.6 times larger than that of the latter) to 0.76 over the past week.
What's next?
Interestingly, CryptoQuant believes that ethereum could continue to underperform bitcoin, especially since it is still above the undervalued territory. According to the analytics firm, eth/btc would need to fall at least 50% from its current level to reach the undervalued zone. At the time of writing, bitcoin's price is hovering around $53,700, while ethereum is valued at $2,213, according to the report. Data from CoinGecko.
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eth struggles against btc on the daily timeframe | Source: ETHBTC chart from x/ItK8pB90/" target="_blank" rel="noopener nofollow">TradingView
Featured image from iStock, chart from TradingView
