Ethereum Underperforms $BTC by 44% Since the Merge

Ethereum has reportedly underperformed the top crypto token Bitcoin by nearly forty-four percent since its merge event. As per CryptoQuant, since the Proof-of-Stake transition of Ethereum in 2022’s September, Ethereum has seen a 44% underperformance while the present price ratio of $ETH/$BTC is 0.0425, which is the lowest level following 2021’s April.

Ethereum 44% Underperformance Against Bitcoin Since the Merge Denotes a Shift in Investor Sentiment

CryptoQuant has discussed the current downturn of Ethereum in comparison with Bitcoin in its latest weekly report. Irrespective of the high hopes concerning the growth and performance of Ethereum after The Merge, it has reportedly expressed a significant deficit. Even following the approval of the US-based Ethereum spot ETFs in July, $ETH kept on declining with an 18% dip.

The Market Value to Realized Value ratio of the ETH/BTC pair is now standing at 0.6. This figure signifies that Ethereum could drop further before it touches its undervaluation territory. The respective zone is identified at a ratio of 0.45. The previous time when Ethereum entered this territory, the price thereof was 0.02 as compared with Bitcoin.  This suggested the expectation of a likely further downside.

In addition to this, the network activity of Ethereum has also displayed indications of weakness as compared with Bitcoin. A noteworthy metric in this respect takes into account the cumulative transaction charges on the Ethereum network. Moreover, the Dencun upgrade decreased median transfer fees, contributing to this dip. On the other hand, the network of Bitcoin recorded all-time highs regarding transaction activity, mostly driven by new L2 solutions and inscriptions.

Slow Network Activity, Unfavorable Supply Dynamics, and Lower Transfer Fees Drive Ethereum’s Underperformance

The transaction count of Ethereum has also underperformed that of Bitcoin. This figure dropped from 27 (a record high) to only 11. Traders seem to incline toward Bitcoin instead of Ethereum as its spot trading volume ratio plunged from 1.6 to just 0.76 last week. Overall, CryptoQuant asserted that the underperformance of Ethereum in comparison with Bitcoin emerges due to the decreased network activity, unfavorable supply dynamics, and lower transfer fees.