The cryptocurrency market has been facing significant bearish pressure in recent weeks, with major assets like Bitcoin (BTC) and Ethereum (ETH) struggling to show positive momentum. The past week has been particularly challenging for these two leading cryptocurrencies, as they both experienced double-digit losses in the last seven days.
While Bitcoin has been performing relatively better than Ethereum in terms of market action, a blockchain analytics company called CryptoQuant has shed some light on the dynamics between the two cryptocurrencies. In their latest report, CryptoQuant discussed how Ethereum has underperformed Bitcoin by 44% since The Merge event in 2022, which marked Ethereum’s transition from a Proof-of-Work to a Proof-of-Stake network.
As of now, data from TradingView shows that the ETH/BTC price is at around $0.04122, the lowest level since April 2021. Despite the recent launch of spot Ethereum exchange-traded funds (ETFs) in the US, Ethereum’s performance against Bitcoin has been lackluster, with the ETH/BTC pair down by 18% since the approval of the funds.
CryptoQuant attributes Ethereum’s sluggish performance against Bitcoin to its weaker network activity. For example, Ethereum’s total transaction fees have been declining consistently after the Dencun upgrade, and the transaction count has hit a multi-year low of 11. Additionally, the supply dynamics have not been in Ethereum’s favor compared to Bitcoin, as the total Ether supply has been growing steadily since the Dencun upgrade in early April.
Investors have also shown a preference for Bitcoin over Ethereum, as indicated by the decrease in the relative spot trading volume of ETH to BTC from 1.6 to 0.76 in the past week. CryptoQuant believes that Ethereum could continue to underperform against Bitcoin, especially since it is still above undervaluation territory. According to the analytics firm, ETH/BTC would need to drop by at least 50% from its current level to reach the undervaluation zone.
At the time of writing, Bitcoin is priced at around $53,700 and Ethereum at $2,213, according to CoinGecko data. The chart from TradingView also illustrates how ETH struggles against BTC on the daily timeframe. Overall, the cryptocurrency market remains volatile, with Bitcoin continuing to outperform Ethereum despite the latter’s efforts to gain traction.
In conclusion, the performance of Bitcoin and Ethereum in the cryptocurrency market is influenced by various factors such as network activity, supply dynamics, investor preferences, and market sentiment. While Bitcoin has been maintaining its lead over Ethereum, the future remains uncertain as both cryptocurrencies face challenges and opportunities in the evolving digital asset landscape. Investors and traders should stay informed and cautious in their decision-making to navigate the volatile market conditions effectively.
