Bitcoin’s recent rally to $68,000 and a market cap of $1.34 trillion has widened its lead over Ethereum, whose market cap has declined to around $300 billion—the lowest since early 2021. The ETH/BTC ratio has dipped to 0.037, marking an inflection point last reached in April 2021. Analysts suggest this divergence is fueled by limited institutional interest in Ethereum, evident from relatively low open interest in its CME futures compared to Bitcoin. Bitcoin’s futures volume has set records, underscoring strong institutional demand, while Ethereum futures are significantly less active, with only about $970 million in open contracts.
The enthusiasm around Ethereum’s Merge update in 2022 initially brought hope for competitiveness, yet Ethereum’s value relative to Bitcoin has since dropped by over 50%. This downward trend follows Bitcoin’s position as “digital gold,” particularly after multiple bank collapses in 2023, when Bitcoin gained favor as a hedge. Additionally, Bitcoin’s ETFs have drawn nearly $20 billion in net inflows, supported by high expectations for spot ETFs. In contrast, Ethereum’s spot ETFs launched in July have encountered net outflows, partly attributed to losses associated with the Grayscale Ethereum Trust.
Despite these hurdles, Ethereum advocates remain hopeful. Anthony Sassal, a key supporter, highlights the development of Layer 2 scaling solutions, which aim to reduce transaction costs and enhance network efficiency—advances he argues will drive long-term adoption. Ethereum has also faced growing competition from Layer 1 networks like Solana, which offer similar services at a lower cost, impacting Ethereum’s market appeal.
Looking ahead, Ethereum could benefit from evolving market conditions, especially if regulatory landscapes shift post-2024 U.S. elections. Furthermore, the continuous development within Ethereum’s ecosystem may attract additional users and investors, potentially narrowing the performance gap. Proponents believe these advancements in scaling and cost reduction could play a significant role in driving adoption, even amid the present dominance of Bitcoin.
