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

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The article "Why Ethereum Price Is Struggling Against Bitcoin After 77% BTC/ETH Crash" by Benzinga highlights the significant lagging performance of Ethereum (ETH) in comparison to Bitcoin (BTC).

Despite introducing numerous upgrades and innovations, ETH has encountered a substantial setback against BTC, with a 77% price crash since December 2021. While the dollar value of ETH has remained afloat, especially in contrast to the collapse of other altcoins, the sustained downturn in the BTC/ETH ratio over nearly four years is a topic of discussion.

On-chain analytics platform Santiment has now broken down the key reasons behind these price struggles.

Nearly Four Years Of BTC Outperformance

As highlighted by Santiment, traders often mention that Ethereum had the potential to surpass Bitcoin. However, on a direct price basis, ETH has suffered a brutal seven-sevenths crash when measured against BTC.

Since December 2021, Bitcoin has plummeted by 71%, while Ethereum has faced an even steeper decline of 77% against the leading cryptocurrency.

While the dollar value of ETH has remained afloat, especially compared to the devastating 96% collapse of SHIB from its all-time high, the sustained downturn in the BTC/ETH ratio over nearly four years is a topic of discussion.

ETH has yet to recover anywhere near its November 2021 all-time high of $4,760. In contrast, Bitcoin has surged 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. Even worse, mid to low-cap altcoins like ATOM, LINK, and LUNA have outperformed Ethereum over the short, mid, and long-term timeframes, further embarrassing the world’s second-largest cryptocurrency by market capitalization. A glance at the ETH/BTC price ratio chart is enough to trigger doubt and uncertainty among long-term holders.

Technical, Sentiment, And Regulatory Issues

Beyond price action and market volatility, Santiment delves into the fundamental reasons behind Ethereum’s sluggish performance over the years. Analysts and traders have major criticisms, which can be broadly categorized as technical, sentimental, and regulatory issues.

Ironically, one of the key drivers of Ethereum’s underperformance are its Layer 2 solutions. L2 solutions like Arbitrum, Optimism, and zkSync are reportedly taking activity away from the mainnet and investor attention.

Instead of concentrating investments on ETH, which has seen lackluster returns since the 2021 bull market, investors are spreading their attention and capital too thinly.

Secondly, many critics feel that Ethereum struggles with complex roadmaps and communication, which has led to investor confusion. Major updates like The Merge and Shanghai have been difficult for investors to comprehend, making ETH feel less accessible than BTC.

Thirdly, users remain frustrated by Ethereum’s relatively high gas fees and the slow rollout of key upgrades. This has pushed them toward more affordable and faster alternatives, significantly reducing adoption.

Another primary reason for Ethereum’s crash against Bitcoin is ongoing regulatory concerns. Unlike Bitcoin, which has a more established legal precedent, Ethereum faces constant uncertainty about whether it could be labeled a security.

Other points include ETH’s lack of appeal for new investors. While Bitcoin maintains the title as a stable digital gold, Ethereum appears to be caught in between, having no clear or attractive investment narrative.

Newcomers prefer either the cheaper and faster solutions offered by mid to small-cap altcoins or the sustained price stability and value store properties of BTC.

Moreover, newer blockchains like Solana and Cardano are also attracting a significant number of users with cheaper and faster solutions, ultimately pulling investments away from ETH.

The final reason Santiment has identified for Ethereum’s long-term price descent is the increasing selling pressure. After the recent upgrades, there has been a large wave of post-upgrade withdrawals of staked ETHs, which has created steady sell-side pressure, limiting growth and momentum compared to Bitcoin.