Ether’s Underperformance Against Bitcoin: A Long-Term Trend
Introduction
Ether (ETH), the second-largest cryptocurrency by market capitalization, has struggled to keep pace with its larger rival, bitcoin (BTC). This trend is not new, as a comparison of the ether to bitcoin ratio across past cycles shows consistent underperformance. In this article, we will examine the current cycle and explore the reasons behind ether’s struggles.
A Look at Past Cycles
The chart above represents the current cycle that started in November 2022, when bitcoin bottomed at around $15,500 during the collapse of crypto exchange FTX. As seen in the chart, the ratio of ether to bitcoin has consistently underperformed, with each cycle showing a diminishing return against bitcoin.
The Current Cycle
On Wednesday, the ratio dropped below 0.0300 to touch 0.02993, a four-year low. The previous low was recorded on January 19, a day before President Trump’s inauguration. This month, the ratio has declined 15%, and it has fallen 44% over the past year.
What’s Driving the Underperformance?
“My general take is that the ether to bitcoin ratio underperformance is more due to a strength of bitcoin rather than a weakness of ether,” said Andre Dragosch, head of research at Bitwise’s European desk. “Ether tends to suffer from ‘middle child syndrome,’ it is not as scalable as smart contract competitors like solana (SOL) while it is not really competing with bitcoin as the prime store-of-value.”
Conclusion
Ether’s underperformance against bitcoin is a long-term trend that has been consistent across past cycles. While the reasons behind this trend are complex, it is clear that ether faces significant challenges in terms of scalability and competition from other smart contract platforms. As the cryptocurrency market continues to evolve, it remains to be seen whether ether will be able to overcome these challenges and regain its position as the leading smart contract platform.
FAQs
Q: What is the current ratio of ether to bitcoin?
A: The current ratio is around 0.02993, a four-year low.
Q: How has the ratio changed over the past year?
A: The ratio has fallen 44% over the past year.
Q: What is driving the underperformance of ether against bitcoin?
A: According to Andre Dragosch, head of research at Bitwise’s European desk, the underperformance is due to a strength of bitcoin rather than a weakness of ether. Ether suffers from “middle child syndrome,” it is not as scalable as smart contract competitors like solana (SOL) while it is not really competing with bitcoin as the prime store-of-value.
Q: What are the implications of ether’s underperformance?
A: The underperformance of ether against bitcoin has significant implications for the cryptocurrency market, as it highlights the challenges faced by ether in terms of scalability and competition from other smart contract platforms.
