While Bitcoin (BTC) has experienced significant price gains in 2024, Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, has displayed a less impressive performance. Several factors have contributed to this relative underperformance of Ethereum when compared to Bitcoin.
1. ETH’s Underperformance Against Bitcoin
Looking at the ETH/BTC trading pair, a concerning trend emerges. Over the past 90 days, Ethereum has consistently trended lower against Bitcoin. This indicates that while both cryptocurrencies might be experiencing price fluctuations, Bitcoin has managed to outperform Ethereum.
2. The Rise of Bitcoin Dominance
Bitcoin’s dominance in the cryptocurrency market has been steadily rising throughout 2024. This metric, measured by the percentage of the total cryptocurrency market capitalization that Bitcoin occupies, reflects investor preference for Bitcoin over other cryptocurrencies. The increasing dominance of Bitcoin can put downward pressure on the price of Ethereum and other altcoins.
3. Sluggish Ethereum On-Chain Metrics
On-chain metrics provide valuable insights into the health and activity of a blockchain network. In the case of Ethereum, several on-chain metrics have painted a sluggish picture in 2024. There has been a decline in the number of active addresses on the Ethereum network, signifying a decrease in user activity. Additionally, there has been a slowdown in Decentralized Application (DApp) usage, which could further dampen investor sentiment towards Ethereum.
4. Lack of Major Protocol Upgrades
The year 2024 has been relatively quiet in terms of major protocol upgrades for the Ethereum network. While upgrades like Ethereum 2.0 are anticipated in the future, delays or technical hurdles can lead to investor uncertainty and hinder price growth.
5. Regulatory Uncertainty Surrounding Ethereum
The regulatory landscape surrounding cryptocurrencies, particularly Ethereum, remains somewhat uncertain. Potential regulations or restrictions imposed by governing bodies can create a climate of fear among investors, impacting Ethereum’s price negatively.
Conclusion
Several factors have contributed to Ethereum’s price lagging behind Bitcoin in 2024. From its underperformance against Bitcoin in the trading pair to sluggish on-chain metrics and regulatory uncertainty, a confluence of events has dampened investor enthusiasm for Ethereum. However, Ethereum’s potential for future growth remains strong, with upcoming protocol upgrades and a vibrant developer ecosystem on the horizon.
This information is not legal advice. Do your own research before making any decisions. Only invest what you can afford to lose and seek independent financial advice if needed. Understand the risks involved before purchasing any cryptoasset