The Floppening: Ethereum (ETH) Underperforms Bitcoin (BTC) by 44% Two Years After The Merge, Trails Altcoins like Solana (SOL) and BNB

Many Ethereum fans have been ardently clamoring for the “Flippening,” but with the current trends, it seems that dream might be slowly slipping away.

Nearly two years after Ethereum’s blockchain underwent “The Merge” — transitioning from a proof-of-work to a proof-of-stake consensus mechanism — investors in ETH who anticipated the pivotal upgrade would provide a financial boost have instead witnessed diminishing returns on their investment. Ether's price has lagged behind Bitcoin (BTC), BNB, and even Solana (SOL) since the blockchain's switch to PoS on September 15, 2022.

The Floppening

Ethereum began 2024 on a strong note but started to flatline by mid-March. While the second-largest cryptocurrency gained some momentum in mid-May ahead of the approval of U.S. spot-based ETH exchange-traded funds (ETFs), it has underperformed Bitcoin by a significant 44% since the blockchain's shift to the PoS setup.

“Next week will mark two years since Ethereum shifted to a proof-of-stake network, an upgrade that is also known as The Merge. Since then, Ethereum has notably underperformed Bitcoin by 44%,” CryptoQuant experts noted in a Thursday report.

CryptoQuant highlighted that the ETH/BTC price currently hovers around 0.0425, which is its lowest level since April 2021. Notably, Ether has underperformed the benchmark cryptocurrency even after the debut of spot ETH ETFs on U.S. exchanges on July 23.

The experts predicted that Ether could drop a further 50% against Bitcoin before bottoming out:

“Ethereum could fall further relative to Bitcoin as Ether is still above the undervaluation territory. We calculate that Ether would need to drop to around 0.02 in Bitcoin terms, a 50% decline, to enter undervaluation territory.”

According to the analysts, Bitcoin is not the only cryptocurrency that Ethereum has trailed since The Merge.

“Ethereum has also underperformed altcoins like Solana and BNB since ‘The Merge,’ down 53% and 18% respectively,” stated Julio Moreno, CryptoQuant's Head of Research.

Is The Flippening Dream Over?

Many Ethereum enthusiasts have been eagerly awaiting the “Flippening,” but recent trends suggest that this dream may be fading.

A key factor contributing to Ethereum's underperformance, according to CryptoQuant, is the network's Mainnet transaction count relative to Bitcoin’s, which has fallen to one of its lowest levels since July 2020. Moreover, Ether's total supply has been expanding since the execution of the Dencun upgrade in April and is no longer deflationary.

“Ethereum underperformance appears to be linked to weaker network activity dynamics compared to Bitcoin,” noted the CryptoQuant analysts.

Another reason cited is the total transaction fees on the Ether network, which have declined in comparison to those on the BTC network. This decrease in transaction fees on the Ethereum network following Dencun is to blame for the drop.

Despite the underperformance, some analysts remain optimistic that spot ETH ETFs will propel Ether's price to new highs, with some predicting that Wall Street will use it to bet on Web3's growth and others envisioning the spot Ethereum ETFs amassing over $15 billion by 2025-end, driving ETH's price to $5,000 during this cycle.

The above is the detailed content of The Floppening: Ethereum (ETH) Underperforms Bitcoin (BTC) by 44% Two Years After The Merge, Trails Altcoins like Solana (SOL) and BNB. For more information, please follow other related articles on the PHP Chinese website!