In the latest cryptocurrency bull market, a notable trend has emerged: Ethereum (ETH), the second-largest cryptocurrency by market cap, is showing clear signs of weakness relative to Bitcoin (BTC). This shift is especially intriguing given that, during the 2021 bull run, ETH significantly outperformed BTC. The reversal of this pattern in the current cycle has sparked widespread discussion among investors and analysts.
Since the beginning of 2024, although ETH’s price has risen, its performance relative to BTC has consistently declined—with the ETH/BTC ratio hitting multi-year lows. This unexpected underperformance stems from multiple factors, including macro-economic conditions, regulatory developments, technical challenges, and shifting market sentiment. The approval of spot ETFs for both BTC and ETH has further highlighted divergent institutional investment behavior, making the contrast between the two cryptocurrencies even more pronounced.
A multidimensional analysis of this trend offers valuable insights into the current dynamics of the crypto market and helps investors make more informed decisions. This article explores the key reasons behind ETH’s relative weakness and its potential implications for the broader blockchain ecosystem.
Educational Gap Among Investors
One of the most significant factors influencing market behavior is the difference in investor awareness and understanding between Bitcoin and Ethereum. Bitcoin, as the original and most widely recognized cryptocurrency, dominates nearly 60% of the total crypto market cap. More importantly, it occupies a unique place in public perception.
For the general public, “Bitcoin” is synonymous with cryptocurrency. Media coverage, social discussions, and even mainstream financial commentary often center around BTC, reinforcing its status as the entry point for new investors. Many people entering the crypto space have limited awareness of alternative coins, including Ethereum. When they decide to invest, they tend to choose what’s familiar—Bitcoin.
The introduction of Bitcoin spot ETFs has amplified this trend. Traditional investors are more comfortable with ETF structures, and the availability of a Bitcoin ETF provides a straightforward, regulated avenue for exposure to crypto. These investors may not fully understand blockchain technology, but they recognize Bitcoin as the market leader—making it the default choice.
This knowledge gap creates a feedback loop: growing adoption of BTC strengthens its dominance, which in turn attracts more media attention and reinforces its reputation. Ethereum, despite its technical sophistication and broader utility, struggles to overcome this branding disadvantage in the short term.
Retail investors often base decisions on familiarity and perceived safety rather than in-depth analysis. In the current climate, this behavioral tendency partly explains why Ethereum is lagging behind Bitcoin in market performance.
Persistent Issues with High Gas Fees
Transaction costs and network efficiency play a crucial role in user adoption and satisfaction. Ethereum, as the leading smart contract platform, has long been criticized for its high gas fees—a major barrier to entry for everyday users.
Gas fees refer to the cost required to perform any operation on the Ethereum network, whether it’s transferring tokens, interacting with decentralized applications, or minting NFTs. Even a simple token swap on the Ethereum mainnet can cost around $10 in fees. During periods of high network congestion, these costs can spike to $50 or more, making small transactions economically unviable.
This has led some to调侃 label Ethereum as a “rich man’s chain.” In contrast, networks like Solana offer significantly lower fees—often just a fraction of a cent per transaction—along with faster processing times. Solana can handle thousands of transactions per second, compared to Ethereum’s 15–30 TPS. This performance advantage has made Solana a preferred platform for meme coin trading and other high-frequency activities.
While Ethereum has been actively developing Layer 2 scaling solutions like Optimism and Arbitrum to alleviate congestion and high fees, these add complexity for end-users, who must navigate bridging assets between chains. For many, especially newcomers, this extra friction is a turn-off.
The user experience gap is clearly influencing market behavior. Solana’s superior throughput and affordability have attracted both developers and users, contributing to its outperformance relative to ETH in recent months. This serves as a reminder that technological superiority alone isn’t enough—usability and cost-efficiency are increasingly decisive factors.
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Lack of Compelling Applications
The previous bull market in 2021—often called “DeFi Summer”—was largely driven by Ethereum-based decentralized applications (dApps). Innovative protocols in lending, trading, and yield farming captured user interest and generated significant returns, fueling demand for ETH.
In the current cycle, however, Ethereum’s application ecosystem appears less dynamic. Many new projects seem to recycle existing concepts rather than introducing groundbreaking functionality. This lack of innovation has reduced user engagement and enthusiasm.
Moreover, there is a growing sense that Ethereum developers are focusing heavily on long-term technical upgrades—such as zero-knowledge proofs and sharding—while overlooking immediate user needs. The average crypto user prioritizes simplicity, affordability, and tangible value. Overly complex interfaces and technical jargon present unnecessary barriers to participation.
Other blockchain ecosystems, notably Solana, have been more effective at aligning with user demand—particularly in the meme coin sector, where low fees and ease of use drive adoption. Ethereum’s developer community may need to rebalance its focus from pure technological ambition to practical, user-friendly applications.
For Ethereum to regain momentum, it must foster dApps that offer clear utility and accessibility. Engaging with broader audiences and emphasizing real-world use cases could help revitalize its ecosystem.
Frequently Asked Questions
Why is ETH/BTC ratio declining?
The ETH/BTC ratio measures how Ethereum performs relative to Bitcoin. Recently, this ratio has decreased due to Bitcoin’s stronger institutional inflows, greater brand recognition, and the impact of its spot ETF. At the same time, Ethereum faces challenges like high gas fees and stronger competition from other smart contract platforms.
Will Ethereum’s upgrades improve its performance?
Ethereum’s ongoing upgrades, including Proto-Danksharding and Layer 2 scaling solutions, aim to reduce transaction costs and increase throughput. If successful, these could enhance Ethereum’s competitiveness. However, market response will depend on actual improvements in user experience and adoption.
Is Solana replacing Ethereum?
While Solana has gained significant traction in certain areas—like meme coins and high-frequency trading—it does not yet offer the same level of security, decentralization, or established developer ecosystem as Ethereum. Both networks serve different needs and may continue to coexist.
How do ETFs affect BTC and ETH differently?
Bitcoin’s ETF approval has made it easier for traditional investors to gain exposure, increasing demand. Ethereum’s ETF, while significant, has so far attracted less capital. Investor familiarity with Bitcoin gives it an advantage in the traditional finance landscape.
Should I invest in Bitcoin or Ethereum?
This depends on your investment goals, risk tolerance, and belief in each network’s long-term value. Bitcoin is often viewed as digital gold and a store of value, while Ethereum offers utility through smart contracts and dApps. Diversification is a common strategy.
Can Ethereum regain its lead?
Ethereum continues to evolve, and its community is highly motivated to address current limitations. Success will depend on executing technological improvements, enhancing scalability, and encouraging innovative applications that attract users.
Conclusion
Ethereum’s underperformance relative to Bitcoin in this bull market can be attributed to several interconnected factors: a gap in investor education, persistently high transaction fees, and a shortage of compelling new applications. While Bitcoin benefits from strong branding and institutional adoption, Ethereum must overcome technical and usability challenges to reclaim its competitive edge.
The current market dynamic should serve as a catalyst for the Ethereum ecosystem to refocus on user experience, cost reduction, and real-world utility. With continued development and community engagement, ETH has the potential to rebound—but it must act decisively to adapt to an increasingly competitive landscape.