Ethereum (ETH) continues to struggle in comparison to Bitcoin (BTC), as the second-largest cryptocurrency by market capitalization has reached new multi-year lows against Bitcoin.
Ethereum Struggles Against Bitcoin
Today, Ethereum’s native token, ETH, fell further against BTC, hitting a low of 0.0365 and wiping out all gains made against Bitcoin since April 2021. This decline to multi-year lows is likely to temper the optimism of long-time ETH supporters.
In December 2021, ETH achieved a local high of 0.0865 relative to BTC. However, since then, the smart contract token has experienced a steady decline of nearly 58% against the leading cryptocurrency.
The last time ETH posted a monthly gain against BTC was in May 2024. It is quite possible that by the end of October, ETH will have recorded five consecutive months of losses against Bitcoin.
Year-to-date (YTD), ETH has dropped over 30% against BTC. Moreover, in the past three months, the ETH/BTC trading pair has decreased by over 22%, indicating that these significant declines are more recent.
Though several factors may account for ETH’s underwhelming price performance, a primary reason appears to be the rising competition from alternative smart contract blockchains such as Solana (SOL).
The following chart illustrates that SOL has been gaining ground against ETH after a brief period of consolidation in June 2024. So far this year, SOL has achieved nearly 60% gains compared to ETH. As of this writing, the SOL/ETH ratio is nearing a new all-time high (ATH) at 0.069.
Factors Impeding ETH’s Progress
Despite the growing adoption of Ethereum — recently bolstered by the approval of an Ethereum exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC) — these developments have yet to fully translate into positive price movements for the ETH token.
Notably, a recent report indicated that more than 34 million ETH — nearly 30% of its total supply — is currently staked. Despite this reduced circulating supply, ETH’s price has continued to struggle against other digital currencies.
Additionally, the remarkable growth observed in Ethereum layer-2 (L2) solutions, such as Optimism, Arbitrum, and Base, has diverted some attention away from the main smart contract platform. In August, Justin Bons, founder of Cyber Capital, remarked that “Ethereum is dying while L2’s dance on its grave.”
In contrast to the prevailing pessimism regarding its price movement, ETH whales appear unfazed as they continue to accumulate more tokens in anticipation of future price increases. Recent analysis found that these whales currently hold around 43% of ETH’s total supply.
In a similar vein, earlier this month, asset management firm BlackRock was reported to be selling its BTC holdings in exchange for ETH, hinting at a positive outlook for the token. At the time of reporting, ETH is valued at $2,532, reflecting a 0.2% increase in the last 24 hours.
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