Ethereum (ETH) Underperforms Bitcoin (BTC) Despite New ATH, Raising Questions About Its Relative Strength

As Bitcoin (BTC) reached a new all-time high (ATH) of $98,310 today, the ETH/BTC trading pair fell to multi-year lows, raising questions

Bitcoin (BTC) hit a new all-time high (ATH) of $98,310 on Monday, while the ETH/BTC trading pair fell to multi-year lows.

What Happened: BTC’s new ATH brings it closer to the much-anticipated $100,000 level. However, BTC’s sustained dominance has led to the underperformance of altcoins, including Ethereum, throughout the year.

A glance at the weekly chart shows that the ETH/BTC trading pair dropped to a multi-year low of 0.0331 — a level last seen in March 2021. The pair failed to form a new higher high since December 2021, reflecting a decline of over 60%.

The pair’s losses accelerated from July 2024, coinciding with BTC’s price surge, which was driven by rising optimism over pro-crypto Republican candidate Donald Trump’s prospects in the U.S. presidential election.

Institutional preference for BTC over other cryptocurrencies was also evident in the success of Bitcoin exchange-traded funds (ETFs). At present, BTC ETFs hold more than $100 billion in total net assets.

While Ethereum ETFs also received regulatory approval, they didn’t match the success of their Bitcoin counterparts. For instance, US-based spot Ethereum ETFs have only managed to accumulate $8.96 billion in total net assets so far.

Other factors, such as Bitcoin’s halving in April — which slashed miner rewards from 6.250 BTC to 3.125 BTC — further reinforced the digital asset’s supply scarcity narrative. In contrast, Ethereum’s rising issuance rate has led some experts to question its “ultrasound money” status.

See More: Best Crypto ETFs

Relative Strength, Weak Institutions: Several factors contributed to ETH’s relative underperformance against BTC in 2024.

Institutions, such as hedge funds and family offices, played a crucial role in driving BTC’s price to new highs. These institutions largely favored BTC due to its scarcity, liquidity and regulatory clarity compared to other cryptocurrencies.

On the other hand, Ethereum faced challenges in attracting institutional capital, especially during the bear market that followed the collapse of FTX. This was partly due to the regulatory uncertainty surrounding ETH, which is considered a security by some authorities.

Moreover, ETH’s high volatility and the lack of a clear narrative for its price movements made it less appealing to institutions that prefer more stable and predictable assets.

Despite ETH’s relative underperformance, several analysts remained optimistic about its prospects, especially in the lead-up to the Shanghai upgrade, which is expected to unlock staked ETH.

According to crypto analyst @CryptoGemRnld, the ETH/BTC chart showed two strong support levels — a trendline support and a demand box zone, which acted as a "double bottom."

"Since 2017, we have historically bounced from these levels, often leading into altcoin seasons," the analyst said.

Seasoned trader Peter Brandt also suggested that the ETH/BTC ratio may be nearing its bottom.

"This ratio has been ignored by almost everyone, yet it may be signaling the last stage of bear market for ETH/BTC, with a possible bottom in December and the ratio beginning to move up," Brandt said.

Recent data indicated that ETH may be undervalued at current prices. Limited inflow of ETH to exchanges, coupled with a lack of significant profit-taking, suggested that ETH bulls were holding out for further gains.

Additionally, spot ETH ETFs saw strong inflows, attracting over $515 million between November 9 and November 15. At press time, ETH traded at $3,333, up 7.4% in the past 24 hours.