Ethereum [ETH] Has Underperformed Since April, Especially When Compared to Bitcoin [BTC]

As the leader of the altcoin market, some participants expect ETH to lead the altcoins' bullish price action. As things stand, however, the altcoin is struggling to keep up with the market.

Ethereum [ETH] has underperformed since April, especially when compared to Bitcoin [BTC]. As the龙头 of the altcoin market, some participants expected ETH to lead the altcoins’ bullish price action. However, currently, the altcoin is failing to keep up with the market.

ETH/BTC Chart by TradingView

The ETH/BTC chart has been in a clear downtrend since April 2023. Until April 2024, the lows from June 2022 at 0.049 were defended, but the persistent downtrend over the last six months took ETH/BTC to lows not seen since April 2021.

What’s causing Ethereum to lose value?

Long-term Ethereum holders might be concerned to see Ethereum losing ground to Bitcoin at such a rapid rate. One reason the token is dropping out is the inflation present in the network since the Dencun update in March 2024.

The Dencun update integrated EIP 4844, which drastically reduced the transaction fees of L2 transactions. While this is good news for users, the falling network fees meant a smaller amount of ETH was being burned, rendering the token slightly inflationary over the last six months.

This was evident in the rising ETH supply chart.

Optimism activity trends strongly bullish

Arbitrum [ARB] and Polygon Ecosystem Token [POL] saw a higher transaction volume, but Optimism [OP] was the clear winner. This showed that the L2s were growing in popularity.

In particular, Optimism outperforming the rest could be largely attributed to the launch of Coinbase’s Base L2 on top of the Optimism Superchain.

An inflationary ETH and its performance against Bitcoin counters the narrative that Ethereum is sound money. A pickup in activity could ease this concern, but the lack of market conviction in ETH can be highlighted by the ETH/BTC chart.