Ethereum’s appeal has diminished in recent weeks, overshadowed by Bitcoin’s ascent to a new 2023 high. Notably, rival blockchains like Solana and Avalanche are gaining prominence, outpacing ETH in token price gains.
On December 21, Glassnode analyst “Checkmatey” suggested that the decline in the market cap ratio between ETH and BTC may only be halfway through. He argued that Bitcoin is poised to further increase its dominance over Ethereum.
Ethereum Sentiment Weakens
Furthermore, in derivatives markets, Bitcoin’s dominance continues to strengthen compared to Ethereum, reaching the 70% threshold. A monthly change in realized market capitalization reveals significantly larger capital inflows for Bitcoin at $13.8 billion per month, surpassing Ethereum’s $6 billion. This discrepancy implies a stronger buyer demand for Bitcoin.
If history is any guide, the decline in market cap ratio between $ETH and $BTC may only be half-way…
Below is a 🧵 covering a few different measures of market dominance between #Bitcoin and #Ethereum, which paints a case for continuation, not reversal.https://t.co/RiPVkb7zoF pic.twitter.com/x0Wa1tldmm
— _Checkɱate 🔑⚡🌋☢️🛢️ (@_Checkmatey_) December 20, 2023
The analyst also highlighted that Ethereum’s realized market cap remains overvalued in comparison to Bitcoin. As ETH holders capitulate and sell at a loss, securing lower prices, Ethereum’s realized cap is expected to decline further.
Furthermore, Bitcoin exhibits a tendency to recover more swiftly than Ethereum following drawdowns in realized market cap. Exchange flow metrics highlight Bitcoin’s dominance, commanding over 75% of transfer activity.
Despite the prevailing sentiment downturn for the world’s second-largest cryptocurrency, Ethereum, it’s important to recognize that such sentiment lulls are inherent to every market cycle. On December 21, Ethereum advocate Anthony Sassano acknowledged this phase, stating, “Seems like we’ve finally reached the ‘death of ETH party’ phase of the cycle. Just bought more ETH to celebrate.” Similarly, Ryan Sean Adams expressed surprise at the negativity surrounding ETH, noting, “I never anticipated ETH would be viewed as a non-consensus underdog again, yet here we are.”
Related: SEC Postpones Decision on Multiple Ethereum ETFs to May
Ethereum’s Value Shows Little Movement
Fundamentally, Ethereum remains robust, as highlighted by Sassano earlier in the week. Despite Ethereum’s price stagnation in the past week, fluctuating between $2,150 and $2,250, it has achieved an 83% gain since the beginning of the year—an impressive feat for a cryptocurrency facing skepticism. At the time of writing, Ethereum was trading at around $2,216, representing a 9% increase over the past 30 days.
