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- More than 19 months after Ethereum’s historic Merge upgrade, the data is clear: the network’s native asset, Ether (ETH), is not keeping up with Bitcoin (BTC).
- The ETH/BTC price ratio tapped another three-year low on Thursday at 0.044, with Ether last experiencing less market dominance against Bitcoin in May of 2021.
- “The flippening was always a dream that has turned into a nightmare,” tweeted Joe McCann, founder of crypto fund Asymmetric.
Explore the ongoing challenges and developments in Ethereum and its comparison with Bitcoin in this detailed analysis.
Why Does ETH Keep Dumping Against BTC?
The trend has been offputting and confusing for Ethereum bulls, of whom many assumed ETH would become a more appetizing investment than Bitcoin following the September 2022 Merge. At the time, the upgrade introduced a proof of stake consensus mechanism, and lowered ETH’s inflation rate by 90%. Combined with Ethereum’s previously implemented transaction fee-burning mechanics, this meant ETH was now both an investment with intrinsic yield and a negative inflation rate – bullish properties that its older brother BTC did not possess.
Technical and Regulatory Challenges Facing Ethereum
Despite these qualities, ETH/BTC has fallen 45% since the Merge took place. This is especially noteworthy given that crypto has been in a general bull market for the past 18 months. During such times, altcoins are accustomed to outperforming BTC. Meanwhile, recent technical breakthroughs have allowed developers to bring applications to Bitcoin that were once unique to Ethereum and other more programmable chains. These include Ordinals NFTs, Runes trading, and BitVM – a new framework for bringing smart contracts and trust-minimized layer 2 networks to the Bitcoin ecosystem.
Ethereum’s Regulatory Woes
Aside from technical concerns, Ethereum also faces major headwinds on the regulatory front. While Bitcoin spot ETF products were approved in January, experts believe any imminent approval for an Ether spot ETF remains highly unlikely. Furthermore, most altcoins including Ether appear to be on the radar of the U.S. Securities and Exchange Commission, prompting legal trouble for against exchanges and other companies interacting with such assets. “We do think that as long as Gary Gensler chairs the SEC, any advancement in the digital-asset space is going to have to come through the judiciary channels,” said Mark Connors, head of research at 3IQ, in an interview with MarketWatch.
Conclusion
Ethereum’s struggles to maintain its market position against Bitcoin highlight significant challenges. Despite its technological advancements and initial post-Merge excitement, ETH faces both technical barriers and stringent regulatory scrutiny that could shape its future trajectory in the crypto market.
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