Cryptoquant: Ethereum Underperforms Bitcoin by 44% Since The Merge

Ethereum's transition to a proof-of-stake (PoS) blockchain, known as The Merge, took place nearly two years ago on Sept. 12, 2022.

input: A recent analysis by Cryptoquant reveals that Ethereum has underperformed Bitcoin by 44% since The Merge. Despite significant upgrades and the recent approval of ethereum spot exchange-traded funds (ETFs), the cryptocurrency continues to face challenges relative to bitcoin.

Cryptoquant: Ethereum Continues to Underperform Bitcoin by 44%

After undergoing the highly anticipated transition to a proof-of-stake (PoS) blockchain, known as The Merge, on Sept. 12, 2022, Ethereum's performance has been a subject of discussion among crypto enthusiasts.

According to recent analysis, ether has notably underperformed bitcoin, with the ETH/BTC price ratio reaching 0.0425 — its lowest since April 2021. This price disparity has attracted attention, especially considering the recent approval of ether spot ETFs in July 2024.

Cryptoquant's data shows that ether has seen a further 18% decline following this development. These figures highlight the ongoing concerns regarding Ethereum's relative market performance.

Delving deeper into the analysis, Cryptoquant's researchers suggest that Ethereum's weaker network activity compared to Bitcoin's network is a key factor in its underperformance.

Total transaction fees on the Ethereum network have seen a decline following the Dencun upgrade, which significantly reduced transaction costs. Additionally, ether's transaction count has dropped from a peak of 27 transactions per second in June 2021 to just 11, marking one of the lowest levels since July 2020.

In contrast, Bitcoin has experienced an all-time high in transactions, driven by new activity on its network, including inscriptions, runes, and layer two (L2) solutions.

Moreover, Ethereum's supply dynamics have contributed to its continued decline. The total supply of ETH has been increasing steadily since early April 2024 and now stands at 120.323 million ETH.

This growth, according to Cryptoquant's analysis, reverses the deflationary trends seen immediately after The Merge and could further impact ether's market position relative to bitcoin in the coming months.

Cryptoquant researchers conclude that ETH would need to fall an additional 50% to be considered undervalued in relation to bitcoin.output