Bitcoin has recently surged ahead of Ethereum, reaching one of the largest value gaps between the two cryptocurrencies in recent history. Bitcoin’s market cap stands approximately $1 trillion above Ethereum’s, which has now reached its lowest level since early 2021.
As of Monday, Bitcoin was trading around $68,000 with a market valuation of $1.34 trillion, according to Binance data. By comparison, Ethereum held a market value of about $300 billion, placing the ETH/BTC ratio at 0.037—a level last observed in April 2021 after Ethereum’s substantial growth the prior year. Like other major altcoins during the previous bull market, Ethereum’s price climbed in sync with Bitcoin’s gains.
One key factor behind this widening gap is the slower institutional demand for Ethereum. The July 2024 launch of spot Ethereum ETFs received a lukewarm reception and did little to alter the market trend. Kaiko’s research report noted that open interest in Bitcoin CME futures has hit successive all-time highs, reflecting strong institutional interest. In contrast, Ether futures open interest on CME remains modest, with just 7,300 contracts valued at $970 million, indicating a relatively underdeveloped market and less institutional enthusiasm for Ethereum.
Ethereum has also struggled to retain value relative to Bitcoin since its highly anticipated Merge update in September 2022, despite overall cryptocurrency market growth in US dollars. Meanwhile, Bitcoin has benefited from a series of bullish developments. For instance, Bitcoin rallied in March 2023 after several U.S. banks collapsed, as investors turned to it as “digital gold.” Later, expectations for the approval of Bitcoin spot ETFs pushed Bitcoin’s price even higher, with the ETF’s success continuing to bolster Bitcoin’s performance in 2024.
Conversely, Ethereum spot ETFs have seen net negative flows since their launch in July, impacted by losses from the Grayscale Ethereum Trust. In contrast, Bitcoin ETFs have attracted nearly $20 billion in net inflows since their debut.
Still, Ethereum’s supporters remain optimistic. Anthony Sassal, an Ethereum educator, argued that Ethereum’s Layer 2 scaling solutions are addressing concerns about high transaction costs and network speed, noting that “current supporters are not merely ‘bandwagoners.’” Traders, however, continue to favor digital assets with higher beta values, partly due to Ethereum’s performance after the Merge and the rise of “ETH killers” like Solana. Many investors now gain exposure to Ethereum through Layer 2 solutions, which have outperformed Ethereum’s main network.
Looking forward, Ethereum may benefit from reduced regulatory risks following the upcoming U.S. elections, as well as from its ongoing ecosystem evolution, which could enhance its value proposition and adoption in the future.
