Ethereum Can't Keep Up With Bitcoin Or Solana: What's Going On?

While the crypto market fell sharply, the ETH to BTC ratio hit a yearly low of 0.041, according to TradingView. While digital assets, particularly ETH, have since seen a significant rally, the ratio remains at 0.043 when article writing.

Many can’t help but find this pattern unusual. During periods of market growth, altcoins have often outperformed Bitcoin as capital flows from the leading digital asset into riskier, smaller-cap assets. This was borne out during Bitcoin’s Q1 rally for altcoins like Solana and meme coins like PEPE and WIF. But not for ETH.

“This reversal challenges the long-standing belief that network effects alone will maintain Ethereum’s dominance,” financial analyst Wesley Kress wrote on Twitter on Tuesday. "Ethereum has been trading this cycle, and I think people are realizing that this cryptocurrency has no future."

Some other analysts believe that such pessimistic forecasts are overblown. Moreover, they are convinced that Ethereum will need some time to recover, especially since the new Ethereum spot ETFs need time to take root in society.

"There has been too much hype about the potential for this ETF to impact the price immediately - there is too much hype right now," cryptocurrency influencer Crypto Kaleo said on Thursday. He noted that the Ethereum ETF has been around for twelve days, which is how long it took BTC to bottom and recover after the ETF debuted in January.

In theory, the ETF is a bullish factor for the price of ETH, as it allows institutions to buy Ethereum in places where regulations previously prohibited it.

However, according to FarsideUK CIO Jonathan Beer, ETFs are unlikely to bring the same success to Ethereum as they did to Bitcoin.

“A large part of the success will come from investors and institutions moving their existing [Ethereum Trust] holdings into the ETF,” Beer told Decrypt. He emphasized that Grayscale’s “rollout” in Ethereum could be bigger than in Bitcoin, as investors will have to pay capital gains taxes when selling their Ethereum Trust shares.

“At the same time, Ethereum investors are less stable than Bitcoin investors,” he added. “Ethereum investors are always looking for something new with the latest technology.”

Solana has outperformed Ethereum in key metrics related to network activity over the year. In late July, Solana surpassed Ethereum in total transaction fees for the first time.

Several network-related market metrics also show that investor interest in ETH is waning compared to BTC. According to CryptoQuant, Bitcoin's "realized market cap" — a measure of new investor inflows into BTC — has grown by $187 billion this year, compared to $127 billion for ETH.

"Bitcoin is outperforming Ethereum on certain fundamental network metrics," CryptoQuant's head of research Julio Moreno told Decrypt. "For example, the ratio of Ethereum transactions to Bitcoin transactions has also declined as the ETH/BTC price ratio has fallen."