Ether-Bitcoin Ratio Falls to Lowest Since April 2021. Here’s Why

• The ether-to-bitcoin ratio falls to a three-year low, extending year-to-date losses to nearly 16%.

• Several factors, such as uncertainty over the launch of the ETH spot ETF in the US and the growth of Ethereum killers like Solana, are responsible for Ether’s underperformance.

The ratio of dollar-denominated prices of ether {{ETH}} to bitcoin {{BTC}} continues to decline, extending year-to-date losses as suggested by bearish death cross pattern a month ago.

ETH/BTC slipped to 0.04563 on crypto exchange Binance shortly before press time, hitting the lowest since April 2021, according to charting platform TradingView. This year, the ratio has declined by almost 16%, indicating a bias towards bitcoin or the leading cryptocurrency in terms of market value.

The fall to a three-year low follows reduced demand for ether-linked exchange-traded products (ETPs).

According to Bloomberg data cited by ETC Group in its weekly report, global ether ETPs saw net outflows of around $63.5 million last week, with exchange-traded funds (ETFs) listed in Hong Kong being those who lost the most. Meanwhile, Bitcoin ETPs brought in $92.5 million last week.

Several factors, including competing Layer 1s and continued uncertainty over when ETH’s one-time approvals will begin in the United States, are likely responsible for ETH’s loss of investor favor.

“The approval of spot bitcoin ETFs in the United States has reinforced the narrative of bitcoin’s store of value and its status as a macro asset. On the other hand, questions remain open about ETH’s fundamental positioning in the crypto sector. Competing Layer 1 (L1) like Solana hurts Ethereum’s positioning as the “go-to” network for deploying decentralized applications (dApps),” David Han, research analyst at Coinbase Institutional, said in a note Wednesday .

Solana’s share of total DEX volume. (DéfiLlama, Coinbase)

Solana’s share of total decentralized exchange volume increased tenfold from 2% to 21% in one year, eating into Ethereum’s market share.

The U.S. Securities and Exchange Commission (SEC) gave the green light to nearly a dozen BTC spot ETFs in January. Since then, those funds have generated about $12 billion in net inflows, according to data source Farside Investors.

The approval of ether-linked spot ETFs will open up a similar capital pool for Ethereum’s native token, although it is unclear when the SEC will approve it.

Traders on decentralized betting platform Polymarket are right A There is a 10% chance that the SEC will approve a cash ETF on or before May 31. The regulator has until May 23 to decide whether to approve or reject VanEck’s application to launch an Ethereum spot ETF. The deadline to apply to BlackRock is June 23.

The story continues

According to financial attorney Scott Johnsson, the SEC is looking for reasons to deny ETH ETF applications from BlackRock and others on the grounds that they were improperly filed as commodity-based trust stocks and not are not eligible if they hold a title.

Ilan Solot, co-head of digital assets at Marex Solutions, said ether is a “lightning rod” for negative sentiment from both native and external crypto players and has several weak points.

“Capital is fragmenting. There are proportionally more ways to gain exposure to the ecosystem thanks to the numerous layer 2 tokens (OP, ARB…) and native protocol tokens in each of them. The capital is fragmented,” Solot said in an email.

Solot added that the strong anti-ETH sentiment of [rival] The Solana community and Bitcoin supporters are generating negative narratives about ether and the high beta cryptocurrency is a “perfect vehicle” for external actors to express a bearish opinion given that it trades on traditional exchanges such as the Chicago Mercantile Exchange.

Finally, Ether recently become inflationaryreversing the upward and deflationary trend in supply seen consistently since its parent network Ethereum moved to a proof-of-stake consensus ecosystem in September 2022.

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