Ether (ETH) has been on a downward trajectory, currently priced at $3,072, after experiencing a rally at the start of the year that began to taper off in mid-March. Despite gaining approximately 48% against Bitcoin (BTC) since January 1st, ETH has trailed behind BTC, which has seen a 57% increase in their respective USD pairs year-to-date.
Several factors contribute to ETH’s recent underperformance against BTC. Firstly, over the last 30 days, Ether has declined by 13.5%, while BTC’s price dropped only 4%. Other major layer 1 tokens like BNB and SOL have surged 15.5% and 16%, respectively, during the same period.
The ETH/BTC ratio has been on a downward trend since March 8th, hitting its year-to-date low of $0.047 on April 7th. Factors influencing Ether’s lag include BTC’s new all-time highs, significant investments in spot BTC ETFs, and the surge in Bitcoin Ordinals trading volume, which surpassed $3 billion. Additionally, anticipation surrounding the upcoming Bitcoin supply halving, historically associated with market bull runs, has favored BTC.
A decline in on-chain activity also contributes to Ether’s underperformance. Ethereum’s network activity, including its scaling solutions, indicates diminishing use in terms of users and volumes, signaling reduced demand for ETH. Top Ethereum DApps have witnessed a 6.42% decrease in active addresses and a 26.51% drop in transaction volume over the past 30 days.
Further data from Coinglass shows a decline in Ethereum’s network activity metrics over the same period. Daily active addresses have decreased from 622,963 to 499,448.
Concerns about the approval of a spot Ethereum ETF by May add to ETH’s bearish sentiment. VanEck CEO Jan van Eck expressed skepticism, suggesting that their application will likely be rejected. Both VanEck and ARK Invest are awaiting the SEC’s decision on their applications, scheduled for May 23rd and 24th. Bloomberg ETF analyst Eric Blachunas, who previously estimated a 70% chance of approval, now sees only a 35% likelihood, citing the lack of communication from the SEC to issuers as a concerning sign. Similarly, analyst James Seyffart questions the SEC’s silence on anticipated applications.
