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Ethereum's Plunge: Institutions Favor Bitcoin as ETH/BTC Ratio Hits Four-Year Low

Coin WorldWednesday, Feb 5, 2025 6:29 am ET

1min read

The Ethereum to Bitcoin ratio has plummeted to a four-year low, signaling a significant shift in institutional investment trends. The ETH/BTC ratio has dropped to 0.027, indicating a stark preference for Bitcoin over Ethereum, particularly among institutional investors.

Ethereum has underperformed Bitcoin significantly, with a staggering 70% decline in the ETH/BTC ratio since September 2022. This decline reflects a challenging market landscape for Ethereum, as institutional investors show a clear preference for Bitcoin, raising concerns for Ethereum's market position.

Analysts from CryptoQuant have indicated that Ethereum's underperformance is partially driven by the blockchain becoming inflationary again. 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.

Adding to Ethereum's woes, the disparity in inflows between BTC and ETH ETFs has become evident. Bitcoin has attracted 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.

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 conclusion, Ethereum's position against Bitcoin has weakened considerably, with recent metrics underscoring a broader institutional pivot towards BTC. While the anticipated Pectra upgrade offers a glimmer of hope for restructuring Ethereum's value proposition, ongoing leadership challenges and market dynamics continue to dictate a cautious outlook for

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