Despite Rolling Out a Large Number of Upgrades and Innovations, the Ethereum Price Continues to Lag Behind Bitcoin (BTC) by a Wide Margin

Despite rolling out a large number of upgrades and innovations, the Ethereum price continues to lag behind Bitcoin (BTC) by a wide margin. Reports reveal that ETH has suffered a staggering 77% price crash

In a recent report by On-chain analytics platform Santiment, researchers have delved into the pressing question on everyone's minds: Why is Ethereum lagging so far behind Bitcoin? Despite rolling out a large number of upgrades and innovations, ETH continues to be outperformed by BTC by a wide margin.

The analysis reveals that Ethereum has suffered a staggering 77% price crash against Bitcoin since December 2021. While the dollar value of ETH hasn't completely collapsed, especially compared to other altcoins, the long-term BTC/ETH ratio still paints a gruesome picture for Ethereum holders.

"The good news is that Ethereum node count has hit a 10-month high as of last Friday. But the bad news is that we've seen a complete lack of recovery in the BTC/ETH ratio since December 2021. At the beginning of the year, the ratio was 1:150, and now it stands at 1:650. This means that Bitcoin has appreciated 4.33x since the beginning of the year, while Ethereum has only appreciated 1.5x," the report highlights.

According to the chart, Ethereum price failed to recover anywhere near its November 2021 all-time high of $4,760. On the other hand, Bitcoin managed to surge ahead, reclaiming much of its market dominance and outpacing ETH across almost every timeframe. This disparity has led many traders and former maximalists to compare ETH to a "shitcoin."

"The optimists among us might say that at least Ethereum isn't performing as poorly as other altcoins. However, even various mid to low-cap altcoins have managed to outperform Ethereum over the short, mid, and long-term timeframes, causing further embarrassment for the world's second-largest cryptocurrency by market capitalization."

According to Santiment, the ETH/BTC price ratio chart alone is enough to trigger doubt and uncertainty among long-term holders.

"The final point to consider is that, despite the hype surrounding the Shanghai upgrade and the potential for a price increase, we're still in the same price range as we were at the beginning of the year. This fact might be causing some annoyance among long-term Ethereum holders."

The report further highlights that there are fundamental reasons for Ethereum's sluggish performance over the years. Some of the major criticisms that analysts and traders have pointed out include technical, sentimental, and regulatory issues.

Ironically, Ethereum's Layer 2 solutions are one of the key drivers of its underperformance. L2 solutions like Arbitrum, Optimism, and zkSync are reportedly cannibalizing activity on the mainnet, taking investments from ETH while spreading investor attention thinly.

"The introduction of L2 solutions has led to a decline in mainnet activity, with users preferring the lower gas fees and faster transaction speeds offered by Arbitrum, Optimism, and zkSync. This shift in attention has ultimately devalued the use cases of the mainnet, diverting interest and capital from ETH."

Another point of contention is that Ethereum struggles with complex roadmaps and communication, which has led to confusion among investors. Major updates like The Merge and Shanghai have been difficult for investors to comprehend, making ETH feel less accessible than BTC.

"Despite the hype surrounding the new narrative for 2024, which focuses on Ethereum's technological advantages and its role as a DeFi hub, the reality is that users are becoming increasingly frustrated by the relatively high gas fees and the slow rollout of key upgrades, pushing them toward more affordable and faster alternatives."

This frustration is a primary reason why they are turning to L2 solutions or pivoting to other blockchains like Solana, Cardano, and Flow, which offer cheaper and faster transaction capabilities, ultimately reducing adoption of the world no 2 cryptocurrency.

The report concludes by stating that the regulatory narrative is another primary reason for Ethereum's crash against Bitcoin. Unlike Bitcoin, which has a more established legal precedent, Ethereum faces constant uncertainty about whether it could be labeled a security.

"Finally, we can't ignore the narrative that Bitcoin is being used as a narrative against which to measure the weakness of other cryptocurrencies, especially in the case of Ethereum. While Bitcoin has managed to maintain a stable price and narrative as digital gold, Ethereum seems to be caught in between, having no clear or attractive investment narrative."

Other points that the report mentions include Ethereum's lack of investment appeal as it's neither a stable digital gold like Bitcoin nor a rapidly growing chain like Solana or Cardano, which are attracting a significant number of users with cheaper and faster solutions, ultimately pulling investments away from ETH.

The final reason that Santiment has identified for Ethereum's long-term price descent is the rising selling pressure. Post-upgrade withdrawals of stakes ETHs have created steady sell-side pressure, especially when compared to Bitcoin, which is heating up on the buy side with a price target of $500