Ethereum's ETH/BTC Ratio Plummets to 0.027 Amidst High Liquidations and Institutional Favoritism

Generated by AI AgentCoin World
Wednesday, Feb 5, 2025 6:29 am ET1min read
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Ethereum Market Faces High Liquidations but Retains Strong Futures Interest

The Ethereum market has been grappling with high liquidations, with the ETH/BTC ratio reaching a precarious low of 0.027, signaling a stark shift in institutional investment trends favoring Bitcoin ETFs over Ethereum. Ethereum has underperformed significantly against Bitcoin, with a staggering 70% decline in the ETH/BTC ratio since September 2022, reflecting a challenging market landscape.

Analysts from CryptoQuant indicate that Ethereum has continued to underperform Bitcoin, partially driven by Ethereum becoming inflationary again. The ETH/BTC ratio has dropped to 0.027 as institutional investors show a clear preference for Bitcoin, raising concerns for Ethereum’s market position.

Institutional investors have been increasingly gravitated towards Bitcoin, with record inflows of $35 billion, while Ethereum’s ETFs managed to pull in only a mere $2.6 billion. This growing preference underscores a lack of robust catalysts supporting Ethereum’s price, as noted by Pratik Kala, head of research at Apollo Crypto.

Adding to the woes for Ethereum, analysts from CryptoQuant have pointed out that Ethereum’s market dynamics have become increasingly inflationary. The total supply of Ethereum has surged approximately 5.4% since February 2024, deviating from earlier expectations that it would remain deflationary post-Merge. As of now, the circulating supply has crept back to levels seen before Ethereum’s pivotal transition to proof-of-stake.

Looking ahead, Ethereum faces additional hurdles as it grapples with internal tensions within its development community. The Ethereum Foundation, under scrutiny for leadership issues, has prompted discourse surrounding the roadmap for enhancements. Vitalik Buterin, Ethereum co-founder, has acknowledged the need for reforms to support clearer leadership and bolster investor confidence.

The upcoming Pectra upgrade, expected by March, is anticipated to enhance the blockchain’s capacity, potentially turning the tide for Ethereum’s market performance. Should these upgrades successfully address the current technical hurdles, analysts believe they could lead to a reversal of Ethereum’s ongoing downtrend.

In summary, Ethereum’s position against Bitcoin has weakened considerably, with recent metrics underscoring a broader