Recently, with the significant increase in BTC caused by ETFs, some counterfeit currencies have also followed suit. However, ETH has once again chosen to be absent, and the ETH/BTC exchange rate has hit a new low with an accelerating downward trend
Recently, with the significant increase in BTC caused by ETFs, some counterfeit currencies have also followed suit. However, ETH has once again chosen to be absent, and the ETH/BTC exchange rate has hit a new low with an accelerating downward trend.
The current market is very delicate: the traditional capital market is generally a bear market, the shadow of the financial crisis has always been present, and the world is also chaotic. If you take a closer look at the crypto market, it seems that only BTC is strong (due to halving and ETF support), while other counterfeit currencies are still in a bear market trend.
According to past experience, when BTC rises, ETH will always rise, especially after the introduction of the destruction mechanism in the EIP1559 protocol, ETH's overall performance is stronger than BTC.
But since the implementation of Ethereum to POS, apart from the hype of "Shanghai upgrade", ETH/BTC has continued to weaken. Why is this? Will ETH continue to emerge from the "Sea of Stars" in the future?
James Butterfill, the research director of CoinShares, attributed the difference in funding changes between BTC and Ethereum to people's expectations of spot Bitcoin ETFs and ongoing concerns about Ethereum.
Bitfinex analysts stated in a report that the main bullish trend in the market is due to BTCETF products, while Ethereum lacks a convincing long-term narrative.
The co founder of analysis firm JLabs Digital stated that institutions may be more willing to invest in Bitcoin spot ETFs because they believeCompared to Ethereum futures, Bitcoin has lower spot risk.
From an institutional perspective, the fundamental reason for the sustained decline in ETH/BTC is not the impact of ETFs, but rather a deeper reason: ETH is more risky than BTC and lacks a convincing narrative for a long time.
Since Ethereum switched to the PoS mechanism, many big Vs have been optimistic about it. Through gas destruction calculations, as long as the chain is active, ETH will significantly deflate. Therefore, many people believe that Ethereum will explode in the next bull market, with a significant increase compared to Bitcoin.
But since the "Shanghai upgrade", Ethereum's performance has been disappointing, with well-known encryption projects such as DYDX and MarkeDao choosing to leave or planning to leave Ethereum.
V God and the Foundation also acknowledge that Ethereum faces a series of challenges, such as centralized pledge.
The market originally expected the development of Layer2 to bring about a huge explosion in the Ethereum ecosystem, but now it has suppressed the underlying demand for ETH, and more and more transactions and applications are starting to detach from the Ethereum layer. This has led to a significant decline in Ethereum's ability to directly capture value and inflation.
In the past 30 days, ETH inflation has exceeded 30000.
From the data, many popular meme and "earth dog" projects are released on Layer2, but they share the security of Ethereum, but the demand for ETH is "very low". In addition, currently Layer2 is dazzling, with even more sickles than real users. In the past few months, due to the demand for "grooming", Layer2 was quite active, but now it has gradually cooled down, further compressing the ecological activity of Ethereum.
Against the backdrop of continuous global liquidity tightening and regional tensions, Bitcoin is more favored by Wall Street and the market, with large businesses and institutions more willing to hold BTC. This has also led to a certain degree of bloodsucking effect, further leading to Ethereum's weak performance. As for when it will improve, it depends on whether ETH can have a new narrative.
I'm done, come on! I am Zhaocai Ge, an old chive who sincerely wishes you a prosperous life in the coin circle. You can privately write to me and chat together.
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