Ether’s Bitcoin Value Plummets by One-Third in Just a Year

Ethereum’s (ETH) market capitalization has lost around one-third of its value in bitcoin (BTC) terms over the past year. Even more concerning is the fact that it has been a disheartening seven years since ETH last reached a new high compared to the leading cryptocurrency.

In the early months of Ethereum’s initial coin offering (ICO) back in 2017, ETH soared to an all-time high of approximately 0.15 per bitcoin. Since then, it has not exceeded that figure.

Even during 2021, despite various positive factors for ETH holders, it managed to peak at only 0.088 per BTC. While this represented a significant recovery from its September 2019 low of 0.016, it still remains 42% below its all-time high from 2017.

Since 2021, investors have been offering progressively less BTC for ETH.

Grasping the reasons behind Ethereum’s inability to reach new highs in BTC terms during 2021 provides valuable insight into its current decline, which has persisted for over 32 months.

Ethereum’s inability to achieve a new peak versus bitcoin in 2021

In 2021, excitement among investors stemmed from announcements regarding Ethereum’s transition to wealth-based block validation known as ‘The Merge,’ expectations of ETH’s deflationary supply model termed ‘ultrasound money,’ and significantly, a network-wide shift to passive yield payouts exceeding 7% APR.

Indeed, by early 2022, speculation reached a heightened 9-12%, even from analysts at Coinbase Institutional. As of now, ETH’s actual yield stands at 3.5%.

In addition to The Merge, intriguing new applications for ETH in areas such as art speculation and purported passive income were garnering mainstream interest.

Despite the rise of Ethereum-based NFTs, a resurgence of astronomical DeFi yields like Olympus’ staggering 7,300% APY, along with a multitude of other Ethereum DeFi protocols, investors showed a marked willingness to offer only 58% of the BTC per ETH compared to four years earlier.

None of these developments were enough to sustain confidence. Investors have consistently offered less BTC for ETH since then.

Discover more: Every prediction made by Michael Saylor regarding Ethereum has been proven incorrect

Layer 2 solutions, SEC endorsements, and landmark achievements

Currently, one of Ethereum’s most exciting and significant use cases appears to be layer 2 solutions — chains of transaction data blocks that are intermittently shared with Ethereum’s blockchain. Indeed, more blockchains seems to be Ethereum’s current strategy for regaining traction.

However, for the last 32 months, this approach has yet to yield results. ETH has been on a downward trajectory in BTC terms since December 2021.

This decline persists notwithstanding many notable achievements by the Ethereum community.

The notoriously skeptical Securities and Exchange Commission (SEC) has publicly acknowledged that “The Commission has not concluded that ETH is a security.”
The SEC also sanctioned the listing of several spot ETH ETFs within U.S. securities markets.
Ethereum has not faced any significant network outages for years, unique wallets are currently at record highs, nodes remain in the thousands, validators surpass 1 million, and most indicators of network health are stable.

Nonetheless, the cryptocurrency market continues to exhibit a ‘winner-takes-most’ dynamic.

Even with millions of altcoins available, ETH’s standing in second place has not sufficed to shift investor confidence from BTC as the most attractive opportunity in this sector. In fact, the competitor Solana has risen sevenfold against ETH since January 2023. Other altcoins have also been making strides, such as those from Telegram, Binance, and Tron.

Solana has increased sevenfold against ETH since January 2023.

As has been the case for most years since 2009, BTC continues to possess a greater market capitalization than the total value of all altcoins combined. With its 53% market dominance significantly overshadowing Ethereum’s 15%, BTC has been steadily gaining traction for over two years.

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