Ether (ETH), the second-largest cryptocurrency, is significantly underperforming bitcoin (BTC) in the current bull cycle, marking its worst performance against its larger rival since Ethereum’s launch in 2015. This analysis explores the historical context of the ETH/BTC ratio and examines potential contributing factors.
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Historical data reveals a consistent pattern of ETH underperformance against BTC across multiple market cycles. The current cycle, beginning with Bitcoin’s November 2022 low of around $15,500 following the FTX collapse, continues this trend. Each successive cycle has witnessed a diminishing return for ETH relative to BTC.
On Wednesday, the ETH/BTC ratio plummeted below 0.0300, reaching a four-year low of 0.02993. This surpasses the previous low recorded just before President Trump’s inauguration in January 2017. The ratio, representing the exchange rate between ETH and BTC, has declined by 15% this month and a staggering 44% over the past year.
Bitcoin is currently trading around $105,000, recovering from a dip to $98,000 triggered by the release of DeepSeek, a Chinese AI program. Ether, currently priced at $3,202, would need to reach approximately $3,360 to recover from the DeepSeek-induced decline. This price disparity highlights the relative strength of Bitcoin in the current market.
According to Andre Dragosch, head of research at Bitwise’s European desk, Ether’s underperformance may be attributed more to Bitcoin’s strength than to inherent weaknesses in Ethereum. He suggests that Ether suffers from a “middle child syndrome,” lacking the scalability of smart contract competitors like Solana (SOL) while also failing to rival Bitcoin’s position as a primary store of value. This positioning challenge potentially contributes to ETH’s struggle to keep pace with BTC’s gains.
In conclusion, the current bull cycle reveals a significant divergence in performance between ETH and BTC. While historical trends suggest a recurring pattern of ETH underperformance, the current market dynamics emphasize Bitcoin’s resilience and dominance. Ether’s future performance hinges on its ability to address scalability concerns and carve out a distinct role within the broader cryptocurrency ecosystem.
