Joe Consorti, analyst at The Bitcoin Layer and advisor to self-custody app Theya, released a scathing critique of the future of Ethereum compared to Bitcoin, shedding light on why he believes Ethereum is facing a “slow and painful death.” Published on X, his analysis titled “The Slow and Painful Death of Ethereum” compares the two leading cryptocurrencies, highlighting significant underperformance and declining market interest in Ethereum.
Why Ethereum is ‘dying’
Consorti begins its analysis by highlighting the stark contrast in performance metrics between Ethereum and Bitcoin over the past year. Ethereum, according to Consorti, has seen a 10.6% drop in value since January, while Bitcoin has seen a substantial 42% increase. This divergence is underscored by the ETH/BTC ratio recently breaking below the 0.05 level, a historical all-time high for both assets. This ratio, Consorti argues, is more than just a number; it represents the shifting balance of power in the crypto market.
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“The most important indicator of the staying power of Ethereum, and all of “crypto” by extension, is ETH/BTC. By removing dollars from the denominator, we can clearly see that from a market dominance perspective, all of “crypto” is on life support. ETH/BTC has created, via the key 0.05 level, an arbitrary but crucial threshold for the trading behavior of the two assets over the years,” Consorti writes.
Speaking about the reasons, Consorti points to the different narratives that have driven investor interest in both cryptocurrencies. Ethereum’s narrative has largely been built around its technological advancements and potential applications, from smart contracts to decentralized finance. However, Consorti suggests that this narrative no longer resonates with investors as it once did, leading to a waning enthusiasm.
On the other hand, Bitcoin continues to attract investors with its clear value proposition of being a decentralized and finite digital asset, which Consorti calls “absolute scarcity.” The analyst points to the performance of U.S. spot exchange traded funds (ETFs). He notes that U.S.-based Ethereum ETF recorded consistent net outflows totaling over $110 million over an 8-day period, indicating a decline in investor confidence. In stark contrast, Bitcoin ETFs not only launched successfully, but continued to attract significant capital, accumulating approximately $750 million in net inflows.
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Another central aspect of Consorti’s argument revolves around the monetary policies of Ethereum and Bitcoin. Ethereum’s shift to a Proof-of-Stake (PoS) consensus mechanism in 2022 initially led to a deflationary supply mechanism. However, this was short-lived, as highlighted by a subsequent upgrade that increased Ethereum’s supply by 200,000 ETH in five months.ultrasound money narrative also died on the vine,” adds Consorti.
He criticizes the frequent changes in monetary policies, contrasting them with Bitcoin’s fixed supply of 21 million coins, which he argues offers investors a reliable hedge against inflation and currency debasement. This makes BTC attractive to everyone. “Bitcoin’s fixed monetary policy and absolutely scarce supply schedule are a breath of fresh air for investors looking to protect themselves from rampant monetary debasement. While ETH ETFs have had a dismal start, Bitcoin ETFs have managed to rank third and ninth in year-to-date net inflows among all U.S.-based ETF products,” Consorti notes.
The broader financialization of Bitcoin is also a key theme in Consorti’s analysis. He discusses recent developments such as Nasdaq’s filing to allow Bitcoin options trading, which reflect Bitcoin’s increasing integration into mainstream financial markets. This, Consorti suggests, not only increases Bitcoin’s legitimacy but also its attractiveness as an investment vehicle relative to Ethereum, which has seen its ecosystem deteriorate in parallel with the decline in the price of its native token.
At the time of writing, ETH was trading at $2,522.
Featured image created with DALL.E, chart from TradingView.com