Ether (ETH) had been experiencing a strong rally at the start of the year, but its momentum started to fade in mid-March. While it has seen a gain of around 48% in its USD pair year-to-date, it has been trailing behind Bitcoin (BTC), which has gained 57% in the same period.
There are three main reasons behind ETH’s underperformance compared to BTC in recent days. Firstly, there has been a decrease in network activity. Additionally, there is declining sentiment surrounding the approval of spot Ethereum ETFs in May.
Over the past 30 days, Ether has been trending lower against BTC. It has seen a decline of 13.5%, while BTC’s price has only dropped 4% in the same period. Other top layer 1 tokens like BNB and SOL have even seen rallies of 15.5% and 16%, respectively.
The ETH/BTC ratio reached its lowest point of the year on April 7, dropping to $0.047.
Several factors have contributed to Ether’s underperformance against Bitcoin in the past month. This includes new all-time high prices for BTC, over $10 billion invested in spot BTC ETFs, and surging trading volume for Bitcoin Ordinals, which has reached close to $3 billion. The upcoming Bitcoin supply halving, which has historically preceded a bull run in the crypto market, has also provided tailwinds for BTC.
One of the reasons for Ether’s underperformance is the decreasing on-chain activity. The diminishing use of decentralized applications (DApps) on the Ethereum blockchain indicates less demand for ETH. Data shows that the top Ethereum DApps have seen a decrease of 6.42% in active addresses over the past 30 days.
Moreover, Ethereum’s network activity has also seen a decline in specific metrics over the past month. The number of daily active addresses on Ethereum has dropped from 622,963 on March 20 to 499,448 on April 10.
While Ethereum remains a dominant force in the DeFi sector, Solana has recently gained market share in terms of on-chain activity, fueled by the memecoin frenzy and stablecoin transfer volume.
The decreasing likelihood of an Ethereum ETF being approved by May is also contributing to ETH’s bearish momentum. VanEck CEO Jan van Eck expressed skepticism regarding the approval of spot Ether ETFs by the U.S. Securities and Exchange Commission (SEC) in a recent interview. Other analysts have also reduced the chances of an Ethereum ETF approval in May due to the lack of communication from the SEC.
It’s important to note that this article does not provide investment advice. Readers should conduct their own research before making any investment decisions.