Ethereum Faces Struggles As Bitcoin Dominates The Market

Ethereum has consistently lagged behind Bitcoin in terms of performance since its launch in 2015, with the ETH/BTC ratio reaching a five-year low of 0.018 on April 9. This marks the lowest point for the ratio since December 2019, when Ethereum was valued at $125 and Bitcoin hovered around $7,000. At present, Ethereum is trading at approximately $1,670, while Bitcoin has dropped by only 6%, maintaining a value of $75,000. Despite this decline, Bitcoin remains more than 275% above its 2017 bull market peak, briefly rising to over $83,000 later in the day.

In stark contrast, Ethereum has fallen below its 2018 market cycle high, erasing nearly seven years of gains. Analysts suggest that this shift places most long-term holders of Ether at a loss, underscoring Ethereum’s struggle to maintain its market position.

Though Ethereum briefly outperformed Bitcoin from mid-2015 to mid-2017 and again in late 2019 to early 2020, Bitcoin has since solidified its dominance in the market. According to James Check, an analyst at Glassnode, Ethereum has outperformed Bitcoin on just 15% of trading days throughout its entire history.

Concerns over Ethereum’s current state are also beginning to surface. Web3 researcher Stacy Muur pointed out on April 8 that the number of active Ethereum addresses has remained relatively unchanged for the past four years. “I love Ethereum. However, it’s time to face reality: Ethereum has had [around] the same number of active addresses for the past 4 years,” Muur said in a post on X.

However, some experts argue that Ethereum’s user activity has shifted to its layer-2 networks, such as Arbitrum and Optimism, which have experienced substantial growth in total value locked. This suggests that users are moving to cheaper and faster alternatives within the Ethereum ecosystem. Data from L2beat supports the trend of increased adoption of these scaling solutions.

In addition, Ethereum’s average transaction fees have fallen to $0.41, the lowest level since late August, marking a significant decline from the $15.21 peak observed in the last two years. This decrease in transaction fees points to reduced network congestion.

Critics, such as Nic Carter of Castle Island Ventures, attribute Ethereum’s weakening investment outlook to the rise of layer-2 solutions and the unchecked creation of new tokens. Carter argued that these “greedy” layer-2 networks are absorbing much of Ethereum’s activity without contributing significantly to the base layer, leading to what he described as the platform being “buried in an avalanche of its own tokens.”

Quinn Thompson, founder of Lekker Capital, echoed these concerns, declaring Ethereum “completely dead” as an investment due to falling transaction activity, declining user growth, and shrinking network revenues. Carter had previously warned in September 2024 that Ethereum’s fee revenue had dropped 99% over the preceding six months as layer-2s increasingly dominated user and revenue flows.

As Ethereum continues to face challenges, the dominance of Bitcoin remains unshaken, and the future of Ethereum’s position in the market appears uncertain.