Ethereum is facing challenges in the current market. Data shows ETH is trading at its lowest value against Bitcoin in over 40 months. The ETH/BTC ratio is now below 0.04, indicating a shift in investor sentiment.
In the investment preferences of institutional investors, the popularity of cryptocurrencies can be observed – now Bitcoin is more preferred in comparison with Ethereum. The first digital currency added 43% in price in 2024 and, despite being volatile, has demonstrated high stability. In contrast, a less expected cost of Ethereum for the year, with an increase in price of only 0.2%, is generally accepted.
This change in preference shows in ETF flows. Bitcoin has seen more positive flows. But Ethereum has had outflows. The market cap of stablecoins has also grown. Stablecoins are seen as safer. Now they are 10% of the combined market cap of Bitcoin, Ethereum, and stablecoins.
This has reduced Ethereum’s share. However, compounding the problem, only 63% of Ethereum owners are making a profit now. This is the lowest level of profitable owners this year. 82% of the total Ethereum bought is still worth more than what was paid. A significant portion of this was purchased between $1,900 and $2,350.
Catalysts for Ethereum potential resurgence
Despite these numbers, ETH remains strong in decentralized finance (DeFi). Over 60% of DeFi assets are locked on its blockchain. It also leads to developer activity and user base.
In contrast to this cautious market sentiment, Ethereum supporter Ryan Sean Adams has pointed out three key reasons why Ether may rise again. He says Ether has special qualities, like its ability to earn yield and its part in DeFi. These make Ether a better store of value than Bitcoin.
Additionally, the growth of Layer 2 blockchain space and new rollups made to reward ETH stakers are key changes that could revive interest in Ether. This could happen despite the current market skepticism.
