Ether (ETH) has been experiencing a decline in performance compared to Bitcoin (BTC) since mid-March, despite rallying at the beginning of the year. While ETH has gained about 48% in its USD pair year-to-date, BTC has seen a 57% increase. There are three main factors contributing to ETH’s underperformance: a decrease in network activity, declining sentiment surrounding the approval of Ethereum ETFs, and the overall bearish momentum.
Over the last 30 days, Ether has seen a 13.5% decrease in value, while Bitcoin has only dropped by 4%. Additionally, other top layer 1 tokens like BNB and SOL have seen rallies of 15.5% and 16% respectively. The ETH/BTC ratio has been declining since March 8, reaching its lowest point of $0.047 on April 7.
There are several reasons behind Ether’s underperformance compared to Bitcoin. These include the new all-time high prices, over $10 billion in investments into the spot BTC ETF, and surging trading volume in Bitcoin Ordinals, which has reached close to $3 billion. The upcoming Bitcoin supply halving, which has historically preceded a bull run in the crypto market, has also contributed to BTC’s success.
One of the key factors affecting Ether’s performance is the decrease in on-chain activity. The diminishing use of decentralized applications (DApps) on the Ethereum blockchain indicates a lower demand for ETH. Data from DappRadar shows a 6.42% decrease in the number of active addresses for the top Ethereum DApps over the last 30 days. Transaction volume in Ethereum DApps has also seen a 26.51% drop, with platforms like Uniswap, MetaMask Swap, Blur, and OpenSea experiencing decreases.
Further data from Coinglass reveals a decline in Ethereum’s network activity, specifically in terms of daily active addresses, which have dropped from 622,963 addresses on March 20 to 499,448 on April 10. Despite remaining a dominant force in the DeFi sector, Ethereum has lost market share to Solana due to the memecoin frenzy and increased stablecoin transfer volume.
In addition to the decrease in on-chain metrics, the likelihood of an Ethereum ETF being approved by May is also decreasing. VanEck CEO Jan van Eck expressed skepticism regarding the approval of spot Ether ETFs by the U.S. Securities and Exchange Commission (SEC). He believes that VanEck’s Ethereum ETF application will likely be rejected. Bloomberg ETF analyst Eric Blachunas also reduced the chances of an Ethereum ETF approval by May to 35%, citing the lack of communication from the SEC to issuers as a negative sign.
In conclusion, Ether’s underperformance compared to Bitcoin can be attributed to a decrease in network activity, declining sentiment towards Ethereum ETF approval, and the lack of communication from the SEC. Investors should conduct their own research and exercise caution when making investment decisions.