The cryptocurrency market has been facing significant bearish pressure in recent weeks, with Bitcoin (BTC) and Ethereum (ETH) struggling to show positive movement. Both of these major cryptocurrencies have experienced double-digit losses in the past week, making it a challenging period for investors.
Despite the overall bearish trend, Bitcoin has been outperforming Ethereum in terms of market action. A recent report from CryptoQuant shed light on the dynamics between Bitcoin and Ethereum, highlighting Ethereum’s underperformance compared to Bitcoin since The Merge event in 2022. This transition from a Proof-of-Work to a Proof-of-Stake network has had a significant impact on Ethereum’s performance relative to Bitcoin.
Currently, the ETH/BTC price stands at around $0.04122, the lowest level since April 2021, according to TradingView data. Even with the recent introduction of spot Ethereum exchange-traded funds (ETFs) in the US, Ethereum has continued to struggle against Bitcoin, with the ETH/BTC pair down by 18% since the ETF approval.
CryptoQuant pointed out that Ethereum’s weak performance against Bitcoin can be attributed to its lower network activity, including declining transaction fees and transaction counts. Additionally, the supply dynamics have not been favorable to Ethereum, with the total Ether supply steadily increasing since the Dencun upgrade in April.
Investors have also shown a preference for Bitcoin over Ethereum, as evidenced by the decline in the relative spot trading volume of ETH to BTC. This shift in investor sentiment has further contributed to Ethereum’s underperformance against Bitcoin.
Looking ahead, CryptoQuant believes that Ethereum could continue to struggle against Bitcoin, especially since it is still above undervaluation territory. The analytics firm suggests that ETH/BTC would need to fall by at least 50% from its current level to reach the undervaluation zone. As of the latest data, Bitcoin is priced at around $53,700 while Ethereum is valued at $2,213, according to CoinGecko.
In conclusion, the cryptocurrency market has been challenging for both Bitcoin and Ethereum, with Bitcoin outperforming Ethereum in recent weeks. Factors such as network activity, supply dynamics, and investor sentiment have all played a role in Ethereum’s underperformance against Bitcoin. As the market continues to evolve, it will be interesting to see how these dynamics impact the future performance of both cryptocurrencies.
