In a startling revelation, Ethereum has lagged behind Bitcoin by 44% since its highly anticipated transition to proof-of-stake (PoS), according to data from digital asset analytics firm CryptoQuant. The revelation has sent ripples through the crypto market, casting doubt on Ethereum’s post-merge trajectory and opening the door to potential further declines.
With Bitcoin and Ethereum standing as the two undisputed leaders in the cryptocurrency space, Ethereum’s recent underperformance has raised eyebrows. Both assets are central to the crypto economy, with the U.S. market offering the only two crypto-based ETFs for these coins. However, with Ethereum struggling, the gap between these digital giants may continue to widen, impacting the market for Ethereum-related products.
Ethereum’s Post-Merge Struggles
Ethereum’s switch to proof-of-stake (PoS), an event hailed as “The Merge,” was expected to fuel its long-term growth. But nearly two years later, the reality has been far less optimistic. According to CoinMarketCap data, Ethereum has seen a 1% drop in the past month and a steeper 6% decline in just the last week. These dips are emblematic of broader issues for Ethereum, as it continues to falter against not only Bitcoin but other major altcoins.
CryptoQuant’s latest report highlights that Ethereum has underperformed Bitcoin by a staggering 44% since The Merge. This downturn is particularly concerning given the initial excitement surrounding Ethereum’s PoS shift, which was supposed to reduce its energy consumption and enhance its scalability.
“Next week will mark two years since Ethereum switched to a proof-of-stake network,” CryptoQuant analysts noted. “Since then, Ethereum has underperformed Bitcoin by 44%,” the firm told The Block.
Underperforming Against Altcoins
Ethereum’s troubles don’t stop at Bitcoin. It has also lost ground against other top altcoins like Solana and Binance Coin (BNB). Solana has outpaced Ethereum by 53%, and BNB has risen 18% in the same period.
Julio Morean, CryptoQuant’s Head of Research, pointed to these developments as signs that Ethereum’s position in the market is weakening. “Ethereum could fall further with respect to Bitcoin, as Ether is still above undervaluation territory,” Morean added, noting that Ether would need to decline another 50% in Bitcoin terms before reaching a point of undervaluation.
The crux of Ethereum’s underperformance seems to be linked to “weaker network activity” compared to Bitcoin. This slowdown in transaction volume and overall usage contrasts sharply with Bitcoin, which has maintained robust activity despite the ongoing bear market.
What Lies Ahead for Ethereum?
While Ethereum’s shift to proof-of-stake was designed to usher in a new era of energy efficiency and scalability, its underperformance raises questions about its long-term prospects. As the second-largest cryptocurrency by market cap, its struggles could impact its broader adoption and standing in the blockchain ecosystem.
Moreover, the growing gap between Ethereum and Bitcoin, as well as other altcoins, suggests that Ethereum may face continued challenges in the months ahead. If network activity doesn’t pick up, Ethereum could see its dominance shrink even further, leaving Bitcoin to solidify its place as the reigning champion of the crypto market.
Ethereum’s 44% underperformance against Bitcoin since its PoS transition is a concerning sign for the crypto market. With weaker network activity and rising competition from other altcoins, Ethereum could be in for a rough road ahead. Analysts warn that the asset may decline further before hitting an undervaluation zone, potentially altering the market dynamics for one of the most important cryptocurrencies in existence.
As Ethereum approaches the two-year mark of The Merge, investors and enthusiasts alike will be watching closely to see if the network can recover its footing.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
