Three Factors Behind Ethereum’s Underperformance Compared to Bitcoin in 2024

Ethereum has recently reached a significant low in its ETH/BTC trading pair, indicating that its lagging price trajectory may persist.

Let’s explore the reasons contributing to Ethereum’s ongoing underperformance compared to Bitcoin in 2024.

1. ETH’s Decline Against BTC Over the Past 90 Days

In the last three months, Ethereum’s value has decreased by 34%, notably underperforming Bitcoin, which has only seen a 15% decline during the same timeframe.

• The ETH/BTC ratio has fallen around 22%, marking a multi-year low of 0.04057 on September 11.
• This ratio’s drop suggests a decreased demand for Ether, as more investors are leaning towards Bitcoin.

The growing success of Bitcoin spot ETFs has overshadowed Ethereum offerings, with reports indicating that the influence of Bitcoin ETFs on its price is significantly more pronounced compared to their Ethereum counterparts.

“This suggests that the appetite for the Bitcoin ETF remains an order of magnitude larger than its Ethereum counterpart.”

2. Bitcoin’s Increasing Market Dominance

Alongside Ethereum’s struggles, the consistent increase in Bitcoin dominance has exerted additional pressure on ETH’s price.

Bitcoin’s market dominance reached 58% on August 5, 2024, the highest in 40 months, indicating a strengthening position relative to altcoins, including Ethereum.

This rising dominance, which measures Bitcoin’s market capitalization against the overall cryptocurrency market, typically reflects investor sentiment. As Bitcoin gains ground, it’s anticipated that ETH’s value against Bitcoin will continue to diminish.

3. Stagnant Onchain Metrics for Ethereum

Ethereum’s performance can also be assessed through onchain metrics, such as the number of active addresses on its network.

• Currently, the 30-day average of daily active addresses on Ethereum is 430,250, reflecting a 7.7% decrease from three months prior and significantly lower than the 686,350 recorded in May 2021.
• Data from DAppRadar indicates that active addresses for Ethereum DApps have decreased by 19% over the past month, contrasting sharply with gains seen by rival blockchains such as Solana and Tron.

For Ethereum to retrieve its value above $2,400, it will require a sustained increase in network activity, Ether transactions, and DApp engagement levels.

This document serves as a general informational source and is not intended to be considered as legal or investment advice. The thoughts expressed here do not necessarily reflect the views of any particular organization or individual.