Ethereum Declines to Four-Year Low Against Bitcoin Amid Surging BTC Prices

Ethereum has reached a four-year low in its value relative to Bitcoin as the latter’s price exceeds $94,000, according to latest market data. The ETH/BTC trading pair has plummeted to 0.03302 BTC, marking a significant decline from mid-2023 levels which were above 0.070 BTC. Bitcoin’s recent surge, hitting a new all-time high of $94,300 on November 20, stands in stark contrast to Ethereum’s downward trend against Bitcoin.

This decline signifies a 51.06% drop since May 2023, highlighting Ethereum’s relative underperformance in the market. Ethereum, once hailed as the silver to Bitcoin’s gold, has only managed a 36% rise this year, compared to Bitcoin’s remarkable 109% increase. While BTC trades at lifetime highs, Ethereum struggles to reach its previous record price of $4,832 seen in 2021.

According to Amberdata research, Ethereum’s underperformance is projected to persist into the year’s end, with traders assigning only a 10% probability of ETH exceeding the $4,000 mark by December 27. Amberdata’s Director of Derivatives, Greg Magadini, attributes Ethereum’s bleak outlook to weak fundamentals, stating, «ETH faces serious headwinds as the value proposition of ‘sound money’ has flipped to inflation supply.»

The industry observes that nearly all decentralized finance (DeFi) transactions are being executed on layer 2 solutions rather than Ethereum’s original layer 1, which could be impacting the cryptocurrency’s market value significantly.

In an effort to ameliorate the situation, influential researcher Justin Drake has put forward the Beam Chain proposal during Ethereum’s biennial Devon gathering. This proposal aims to enhance the blockchain by reducing block times to four seconds from the current 12, potentially increasing the number of processed transactions. However, the realization of the Beam Chain could take several years.