Bitcoin Surpasses Ethereum by 44% Since The Merge: An Analytical Perspective

Cryptonews John Brightwater September 8, 2024

Bitcoin Surpasses Ethereum by 44% Since The Merge: An Analytical Perspective

In recent weeks, the cryptocurrency market has faced significant bearish trends, affecting prominent digital assets such as Bitcoin (BTC) and Ethereum (ETH). Particularly over the past week, both cryptocurrencies have experienced substantial declines, with double-digit losses reported in this timeframe.

Despite a cooling in Bitcoin’s performance during the latter quarters of 2024, it continues to outperform Ethereum, a trend attributed partially to Ethereum’s own lackluster performance. Insights from CryptoQuant, a prominent blockchain analytics firm, shed light on the reasons behind Bitcoin’s superiority over Ethereum.

According to CryptoQuant’s latest findings, Ethereum has lagged behind Bitcoin by 44% since “The Merge” in 2022, which marked Ethereum’s transition from a Proof-of-Work to a Proof-of-Stake network. Presently, data from TradingView indicates that the ETH/BTC trading pair is approximately $0.04122, representing the lowest levels since April 2021. This underperformance has persisted despite recent developments, such as the launch of spot Ethereum exchange-traded funds (ETFs) in the United States, with the ETH/BTC pair declining by 18% following their approval.

The analytics provided by CryptoQuant suggest that Ethereum’s sluggish performance against Bitcoin is linked to its diminished network activity. Notably, the total transaction fees for Ethereum’s network have decreased consistently after the Dencun upgrade, with transaction counts reaching multi-year lows of 11. Furthermore, the supply characteristics are less favorable for Ethereum compared to Bitcoin. Since the Dencun upgrade in April, the total supply of Ether has trended upward, while Bitcoin recently underwent its fourth halving event, which resulted in a reduction of mining rewards from 12.5 BTC to 6.25 BTC.

Investor sentiment also appears to favor Bitcoin over Ethereum, as indicated by a notable decline in the relative spot trading volume of ETH compared to BTC. This ratio has fallen from 1.6 to 0.76 within the past week, reflecting a shift in trading behavior.

Looking ahead, CryptoQuant posits that Ethereum may continue to struggle against Bitcoin. They assert that the ETH/BTC ratio would need to experience a downward adjustment of at least 50% from current levels to enter the undervaluation territory. As of the latest data, Bitcoin is priced at approximately $53,700, while Ethereum stands at around $2,213, according to CoinGecko.

In conclusion, while the cryptocurrency sphere grapples with prevailing bearish trends, Bitcoin’s relative strength over Ethereum remains a pertinent topic of discussion. The insights provided by CryptoQuant furnish substantial grounds for the observed performance disparities between these two leading cryptocurrencies.

Source: CryptoQuant, TradingView, CoinGecko
Featured image from iStock, data sourced from TradingView.