Joe Consorti, an analyst at The Bitcoin Layer and advisor to self-custody app Theya, released an incisive critique on the long run of Ethereum compared to Bitcoin, shedding light on why he believes Ethereum is facing a “slow and painful death.” Published on X, his evaluation titled “The Slow & Painful Death of Ethereum” compares the 2 leading cryptocurrencies, emphasizing significant underperformance and declining market interest in Ethereum.
Why Ethereum Is ‘Dying’
Consorti begins his evaluation by highlighting the stark contrast in performance metrics between Ethereum and Bitcoin over the past 12 months. Ethereum, in line with Consorti, has suffered a ten.6% drop in value since January, whereas Bitcoin has recorded a considerable 42% increase. This divergence is underscored by the ETH/BTC ratio which has recently broken below the 0.05 level, a critical threshold for the 2 assets historically. This ratio, Consorti argues, is greater than only a number; it represents the shifting balance of power within the crypto market.
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“The more essential gauge of the endurance of Ethereum, and all of “crypto” by extension, is ETH/BTC. By removing dollars from the denominator, we will clearly see that from a market dominance perspective, all of “crypto” is on life support. ETH/BTC has cratered through the important thing 0.05 level, an arbitrary threshold but crucial to the trading behavior of the 2 assets over time,” Consorti writes.
Talking concerning the reasons, Consorti points to the differing narratives which have driven investor interest in each cryptocurrencies. Ethereum’s narrative has largely been built around its technological advancements and potential applications, from smart contracts to decentralized finance. Nevertheless, Consorti suggests that this narrative is not any longer resonating with investors because it once did, resulting in diminished hype.
Alternatively, Bitcoin continues to draw investors with its clear value proposition of being a decentralized, finite digital asset, which Consorti refers to as “absolute scarcity.” The analyst points to the performance of the US spot Exchange Traded Funds (ETFs). He notes that US-based Ethereum ETFs have experienced consistent net outflows, totaling over $110 million during an 8-day streak, indicating waning investor confidence. In stark contrast, Bitcoin ETFs haven’t only launched successfully but have continued to draw significant capital, accumulating roughly $750 million in net inflows.
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One other pivotal aspect of Consorti’s argument centers across the monetary policies of Ethereum and Bitcoin. Ethereum’s shift to a Proof of Stake (PoS) consensus mechanism in 2022 initially led to a deflationary supply mechanism. Nevertheless, this was short-lived, as highlighted by a subsequent upgrade that increased Ethereum’s supply by 200,000 ETH over five months. “The ‘ultrasound money’ narrative has also died on the vine,” Consorti adds.
He criticizes the frequent changes of monetary policies, contrasting it with Bitcoin’s fixed supply of 21 million coins, which he argues offers investors a reliable hedge against inflation and monetary debasement. This makes BTC appealing to everyone. “Bitcoin’s fixed monetary policy and absolutely scarce supply schedule are a breath of fresh air for investors who’re keen on hedging themselves from unfettered monetary debasement. While ETH ETFs are off to an abysmal start, Bitcoin ETFs have managed to grab the number 3 and 9 spot in YTD net inflows amongst all US-based ETF products,” Consorti notes.
The broader financialization of Bitcoin can be a key theme in Consorti’s evaluation. He discusses recent developments akin to Nasdaq’s filing to permit Bitcoin options trading, which reflects Bitcoin’s growing integration into mainstream financial markets. This, Consorti implies, not only enhances Bitcoin’s legitimacy but in addition its attractiveness as an investment vehicle relative to Ethereum, which has seen its ecosystem deteriorate in parallel with the worth decline of its native token.
At press time, ETH traded at $2,522.
ETH price, 1-day chart | Source: ETHUSDT on TradingView.com
Featured image created with DALL.E, chart from TradingView.com