The cryptocurrency market has witnessed a significant surge in recent years, with Bitcoin and Ethereum being two of the most popular digital assets.
However, in 2024, Ethereum’s price has continued to underperform against Bitcoin, leaving investors wondering what’s behind this trend.
In this article, we’ll explore three reasons why Ethereum’s price is struggling to keep up with Bitcoin’s.
Reason 1: Market Capitalization
One of the primary reasons for Ethereum’s underperformance is its market capitalization.
Bitcoin’s market capitalization is significantly higher than Ethereum’s, which means that BTC has a larger share of the cryptocurrency market.
According to CoinMarketCap, Bitcoin’s market capitalization is over $1 trillion, while Ethereum’s is around $500 billion.
This disparity in market capitalization affects the price of both cryptocurrencies, with Bitcoin’s larger market share contributing to its higher price.
Reason 2: Investor Sentiment
Investor sentiment is another crucial factor contributing to Ethereum’s underperformance.
Bitcoin has historically been seen as a store of value and a hedge against inflation, which has attracted more investors to the cryptocurrency.
Ethereum, on the other hand, has been viewed as a platform for decentralized applications (dApps) and decentralized finance (DeFi) protocols.
While this has attracted a different type of investor, it hasn’t been enough to match Bitcoin’s appeal.
Reason 3: Regulatory Environment
The regulatory environment is also playing a role in Ethereum’s underperformance.
The US president, Joe Biden, has been vocal about his concerns regarding cryptocurrency regulation.
While this has affected both Bitcoin and Ethereum, Ethereum’s decentralized nature and smart contract functionality have made it more vulnerable to regulatory scrutiny.
The delay in the approval of the spot ETH ETF has also contributed to Ethereum’s underperformance, as investors await a clearer regulatory framework.
Investors Sentiments
“The delay in the spot ETH ETF approval has definitely impacted Ethereum’s price,” said Tim Draper, founder of Draper Fisher Jurvetson.
“Investors are waiting for a clearer regulatory framework before investing in Ethereum.”
“The market capitalization of Bitcoin is significantly higher than Ethereum’s, which affects the price of both cryptocurrencies,” said Peter Schiff, CEO of Euro Pacific Capital. “Bitcoin’s larger market share contributes to its higher price.”
“The decentralized nature of Ethereum makes it more vulnerable to regulatory scrutiny,” said Vitalik Buterin, co-founder of Ethereum.
“However, this also makes it more attractive to investors looking for a platform for decentralized applications and DeFi protocols.”
Impact of the Spot ETH ETF
The spot ETH ETF has been highly anticipated by investors, as it would provide a more straightforward way to invest in Ethereum.
However, the delay in its approval has contributed to Ethereum’s underperformance.
According to a recent survey by The BIT Journal, 70% of investors believe that the spot ETH ETF would positively impact Ethereum’s price.
Ethereum’s underperformance against Bitcoin in 2024 can be attributed to several factors, including market capitalization, investor sentiment, and the regulatory environment.
The Bit Gazzete reports that while Ethereum’s decentralized nature and smart contract functionality have attracted a different type of investor, it hasn’t been enough to match Bitcoin’s appeal.
As the regulatory framework becomes clearer, we may see Ethereum’s price perform better against Bitcoin.
