Despite Ethereum’s (ETH) constant evolution and implementation of numerous upgrades, it has consistently trailed Bitcoin (BTC) by a significant margin. Recent data indicates a shocking 77% price drop of ETH against BTC, a fall largely attributed to a combination of technical, macroeconomic, and sentiment-related factors. Santiment, an on-chain analytics platform, provides a comprehensive analysis of the reasons behind Ethereum’s struggle.
On April 11, Santiment published an exhaustive report on Ethereum, shedding light on its underperformance spanning nearly four years. Once heralded as the cryptocurrency that could topple Bitcoin, Ethereum has experienced a drastic price drop against BTC.
As per Santiment’s on-chain data, Ethereum’s value has plummeted roughly 77% against Bitcoin since December 2021. While ETH’s dollar value has not entirely tanked, especially in comparison to other altcoins, the long-term BTC/ETH ratio is a grim sight for Ethereum investors.
Unfortunately, Ethereum has not managed to bounce back anywhere near its November 2021 all-time high of $4,760. In stark contrast, Bitcoin has surged ahead, regaining a large portion of its market dominance and outperforming ETH in nearly every period.
Many traders and ex-maximalists have disparagingly compared ETH to a “shitcoin.” To add insult to injury, several mid to low-cap altcoins have outperformed Ethereum in the short, mid, and long-term periods, further denting the reputation of the world’s second-largest cryptocurrency by market capitalization. According to Santiment’s report, the ETH/BTC price ratio chart alone is sufficient to instill doubt and uncertainty among long-term holders.
Aside from price dynamics and market volatility, Santiment identifies fundamental reasons for Ethereum’s sluggish performance over the years. Criticisms have focused on technical, sentiment, and regulatory issues.
Surprisingly, Ethereum’s Layer 2 solutions contribute to its underperformance. L2 solutions like Arbitrum, Optimism, and zkSync are allegedly cannibalizing activity on the mainnet, diverting investments from ETH and diluting investor focus.
Furthermore, Ethereum’s complex roadmaps and communication issues have led to investor confusion. Significant updates like The Merge and Shanghai have proven difficult for investors to understand, making ETH seem less accessible than BTC.
User frustration with Ethereum’s high gas fees and slow rollout of key upgrades has driven them toward more affordable and quicker alternatives, significantly reducing adoption.
Regulatory concerns are another major reason for Ethereum’s downturn against Bitcoin. Unlike Bitcoin, which enjoys a more established legal precedent, Ethereum constantly faces ambiguity over its potential categorization as a security.
Other factors include Ethereum’s ambiguous investment appeal. While Bitcoin maintains its status as digital gold, Ethereum seems stuck in limbo, lacking a clear or attractive investment narrative. Newer blockchains like Solana and Cardano are also attracting a significant number of users with cheaper and faster solutions, ultimately drawing investments away from ETH.
The final reason identified by Santiment for Ethereum’s long-term price decline is increasing selling pressure. Post-upgrade withdrawals of staked ETH have created steady sell-side pressure, hindering growth and momentum relative to Bitcoin.
