Ethereum’s Struggles Exposed: Three Charts That Reveal the Harsh Truth

Ethereum investors may find it difficult to accept, but the numbers tell a stark story: the second-largest cryptocurrency is losing momentum, market share, and its dominance alongside Bitcoin. Once a leader in the crypto space, Ethereum has been outpaced by Bitcoin, outmaneuvered by Solana, and economically drained by its own layer-2 solutions. Even its most dedicated supporters are voicing concerns.

The Ethereum Foundation, tasked with overseeing the blockchain’s development, has come under fire for perceived inaction. In response, Ethereum co-founder Vitalik Buterin announced leadership changes while urging the community to ease their criticism of executive director Aya Miyaguchi. Meanwhile, prominent developers like Ben Jones of Optimism are calling for collective action to revitalize the network.

BitGalactic’s analysis dives deep into Ethereum’s struggles and what they mean for its future.

1. Ethereum’s Price Performance Is Falling Behind

Over the past year, Ethereum has significantly underperformed compared to major cryptocurrencies. While Bitcoin and Solana have more than doubled in price, Dogecoin has tripled, and XRP has surged fivefold, Ethereum has only managed a 22% increase—weak by crypto standards.

Recently, Ethereum’s price plummeted 24% to $2,300, its lowest since last summer, before recovering to $2,700 following an unexpected endorsement from Eric Trump. However, analysts warn that the downward trend isn’t over. Arthur Azizov of B2BINPay points out that Ethereum still has an untouched liquidity shelf in the $2,100 range, meaning a further dip is possible.

BitGalactic’s take? Short-term volatility aside, Ethereum’s struggle to generate price momentum reflects deeper concerns about its long-term viability.

2. The Flippening That Never Came

For years, Ethereum enthusiasts championed the idea of the “flippening”—the moment when Ethereum’s market cap would surpass Bitcoin’s. Given Ethereum’s smart contract capabilities and dominance in DeFi, it seemed plausible. But reality has proven otherwise.

Instead of catching up to Bitcoin, Ethereum has fallen further behind. The ETH/BTC ratio is now at its lowest level in four years. With NFTs fading and DeFi expanding beyond Ethereum’s grasp, the network no longer enjoys an uncontested lead in innovation. Meanwhile, Bitcoin has cemented its status as the preferred asset for institutional investors, with MicroStrategy alone holding $30 billion worth of BTC.

Even Ethereum ETFs, launched in the U.S. last year, have failed to gain traction compared to Bitcoin ETFs, which amassed $107 billion in assets under management. BitGalactic notes that Ethereum’s narrative is losing its appeal—if it wants to stay competitive, it must redefine its value proposition.

3. The Economic Black Hole: Is Ethereum’s Deflationary Model Failing?

Ethereum’s transition to a deflationary supply model was seen as a game-changer. The Merge and EIP-1559 led to a shrinking Ether supply, making ETH more scarce and potentially more valuable. However, the recent Dencun upgrade appears to have undone these gains.

Dencun’s introduction of blobspace reduced data storage costs for layer-2 networks but also accelerated Ether’s supply inflation. Instead of remaining deflationary, Ethereum is now inflating again, threatening to erase all the burned ETH since The Merge. Data from Ultrasound.money suggests that Ethereum’s economic model is at risk.

Developers are looking to the upcoming Pectra upgrade to fix these unintended consequences. Pectra aims to revamp smart contract operations, increase on-chain activity, and improve Ethereum’s burn rate. However, BitGalactic warns that without a broader vision to address Ethereum’s growing competition and structural inefficiencies, a single upgrade may not be enough.

The Road Ahead

Ethereum isn’t dead, but it’s facing existential challenges. With Bitcoin reinforcing its position as the market leader and Solana emerging as a serious contender, Ethereum must act fast to regain its competitive edge.

Will the upcoming upgrades be enough to reverse its decline, or is Ethereum’s golden era coming to an end? BitGalactic will be watching closely.