The cryptocurrency market is witnessing a significant shift in asset dynamics as Ether (ETH) continues to underperform Bitcoin (BTC), plunging the ETH/BTC trading ratio to its lowest level in nearly five years. According to James Van Straten, Senior Analyst at CoinDesk, this marks the first time since Ethereum’s inception that ether has weakened against bitcoin in the 12 months following a Bitcoin reward halving—a notable departure from historical trends.
At current levels, 1 ETH equals just 0.02191 BTC, the weakest point since May 2020, when ether traded around $200 and bitcoin hovered near $10,000. Today, despite ETH pricing near $1,800 and BTC approaching $82,000, the relative strength of bitcoin continues to dominate investor sentiment.
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Why Is Ether Underperforming Bitcoin?
The underperformance of ether relative to bitcoin reflects broader macroeconomic pressures influencing investor behavior. With rising concerns over tariff-driven trade wars, persistent global inflation, and elevated bond yields, capital is flowing into assets perceived as more liquid and less volatile. In traditional markets, gold has surged to record highs as a safe-haven asset. In crypto, Bitcoin has increasingly been viewed as digital gold—a store of value with stronger network security, simpler monetary policy, and wider institutional adoption.
This shift has led traders to favor BTC over ETH during periods of uncertainty. While both are foundational digital assets, Bitcoin's fixed supply cap of 21 million and its decentralized, battle-tested proof-of-work consensus give it an edge in risk-off environments.
Ether, by contrast, operates on a more complex ecosystem tied to smart contracts, decentralized applications (dApps), and evolving protocol upgrades. While these features drive long-term innovation, they also introduce perceived complexity and execution risk—factors that weigh on investor confidence during turbulent times.
First Post-Halving Underperformance in History
One of the most striking aspects of this trend is that it breaks historical precedent. On April 20, 2024, Bitcoin underwent its fourth block reward halving, cutting miner rewards from 6.25 to 3.125 BTC per block. In previous cycles—2016, 2020, and earlier—ether had consistently outperformed bitcoin in the 12 months following each halving event.
This time, however, the ETH/BTC ratio has dropped over 50% since the halving, marking a dramatic reversal. Analysts attribute this to several converging factors:
- Macroeconomic headwinds: Higher interest rates and tighter monetary policy have reduced speculative appetite.
- Slower Ethereum adoption growth: Despite upgrades like Dencun improving scalability, real-world usage hasn’t accelerated fast enough to justify premium valuation.
- Increased competition from other layer-1 blockchains: Networks like Solana are capturing developer attention and capital flows.
Comparative Weakness Against Other Layer-1 Assets
Ether’s relative weakness isn’t limited to its performance against BTC. Data shows it’s also lagging behind other major smart contract platforms. The SOLETH ratio—which measures Solana’s SOL against ETH—has risen 24% year-to-date to 0.07007. This means that even though SOL is down 35% in USD terms in 2025, it has significantly outperformed ether on a relative basis.
This suggests growing market preference for alternative layer-1 solutions perceived as faster or more developer-friendly, especially amid debates about Ethereum’s transaction costs and scalability bottlenecks.
Glassnode data further confirms this trend, showing that ether’s current quarterly underperformance against bitcoin ranks among the worst in recent years. The last comparable drop occurred in Q3 2019, when the ETH/BTC ratio fell to 0.0164—a 46% quarterly decline. While not quite at that extreme yet, the current trajectory mirrors past bearish cycles.
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Market Implications and Future Outlook
The declining ETH/BTC ratio signals a potential re-rating of Ethereum’s role in the broader crypto economy. While Ethereum remains the dominant platform for decentralized finance (DeFi), non-fungible tokens (NFTs), and Web3 infrastructure, its valuation premium over Bitcoin appears to be eroding.
For investors, this presents both risks and opportunities:
- A continued decline could indicate prolonged risk aversion and capital rotation into safer crypto assets.
- Conversely, a rebound may signal renewed confidence in Ethereum’s ecosystem upgrades and its long-term utility.
Upcoming catalysts such as further protocol improvements (e.g., EIP-4844 rollups), potential spot ETH ETF approvals in the U.S., and macroeconomic easing could reignite interest in ether.
However, until those triggers materialize, Bitcoin is likely to remain the preferred destination for conservative crypto investors.
Frequently Asked Questions (FAQ)
Why is the ETH/BTC ratio important?
The ETH/BTC ratio measures how many bitcoins one ether can buy. It's a key indicator of relative strength between the two largest cryptocurrencies. A falling ratio suggests ETH is underperforming BTC, often due to shifts in market sentiment or macroeconomic conditions.
Has ether ever underperformed bitcoin after a halving before?
No—this is the first time ether has weakened against bitcoin in the 12 months following a Bitcoin reward halving. Historically, ETH outperformed BTC post-halving, making this shift particularly significant.
What does a low ETH/BTC ratio mean for traders?
A low ratio may present a buying opportunity for traders bullish on Ethereum’s long-term fundamentals. However, it can also reflect ongoing risk aversion and lack of momentum in altcoins.
Is Bitcoin replacing Ethereum as the top crypto?
Not exactly. Bitcoin leads as a store of value; Ethereum remains dominant in smart contracts and decentralized applications. They serve different primary functions within the ecosystem.
Could ether recover its strength against BTC?
Yes—future catalysts like spot ETF approvals, increased DeFi activity, or improved scalability could help ETH regain ground. But recovery depends on broader market conditions and investor risk appetite.
How do macroeconomic factors affect ETH vs BTC?
Rising interest rates, inflation fears, and geopolitical tensions push investors toward safer assets. Bitcoin is increasingly seen as the “safe haven” of crypto, while ether is viewed as a higher-risk growth asset—similar to tech stocks versus gold.
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Conclusion
Ether’s current underperformance against bitcoin underscores a pivotal moment in crypto market evolution. Once seen as the high-growth counterpart to Bitcoin’s stability, ETH now faces increased scrutiny amid macroeconomic uncertainty and rising competition.
While Ethereum’s technological leadership remains intact, market dynamics are shifting. Investors are prioritizing simplicity, liquidity, and resilience—qualities where Bitcoin excels. Whether this trend reverses will depend on upcoming regulatory developments, macroeconomic shifts, and Ethereum’s ability to deliver scalable, user-friendly innovations.
For now, all eyes remain on the ETH/BTC ratio as a barometer of risk sentiment across the digital asset landscape.
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