Signs of Trouble Ahead: Ethereum’s Chart Indicates Downturn with ETH/BTC Ratio Confirmation
Can Ethereum maintain its L1 leadership as Solana advances and the ETH/BTC ratio drops beneath 0.022?
ETH/BTC reaches a multi-year low
Ethereum (ETH), ranked as the second-largest cryptocurrency by market capitalization, is encountering a tough reality. The ETH/BTC ratio, a key indicator of Ethereum’s standing against Bitcoin (BTC), has fallen to 0.022, marking its lowest point since December 2020 and indicating a significant decline in Ethereum’s comparative performance.
Since September 2022, when the ratio was around 0.085, Ethereum has lost over 73% of its value relative to Bitcoin. Currently, ETH is trading at approximately $1,880, reflecting a 9% decline in the past week and a staggering 62% drop from its peak of $4,890 in November 2021.
In contrast, Bitcoin is only down 10% year-to-date, currently trading at around $84,300, making Ethereum’s year-to-date decline of 46% over four times greater.
This declining ratio illustrates Ethereum’s diminishing dominance in the smart contract and layer 1 ecosystems, a domain it once dominated without contest.
As other layer 1s like Solana (SOL), Binance Chain (BNB), Avalanche (AVAX), and others make headway, and Bitcoin reaffirms its dominance, Ethereum seems to be struggling.
Let’s delve deeper into the factors driving this disparity, ascertain whether Ethereum is genuinely losing traction, and explore the implications for the future of the layer 1 blockchain competition.
Ethereum’s metrics reveal signs of weakening
As of April 1, Ethereum’s total value locked (TVL) is approximately $50.5 billion, representing 52.5% of the market total. This is a noticeable drop from 61.64% in February 2024, indicating a slow loss of market share in decentralized finance.
This shift can be partly ascribed to the ascendance of competitors like Solana, whose TVL has surged significantly. Solana’s share has increased from 2.84% to 7.24%, bringing its total TVL to $6.69 billion—more than a 2.5x growth in just over a year.
A noticeable trend is developing concerning user behavior across different networks. Ethereum continues to appeal to users engaged in passive DeFi activities like yield farming and staking.
Conversely, Solana’s platform attracts a more active trading demographic, especially in meme tokens and high-frequency DeFi, suggesting that Ethereum’s established use cases may not align with current retail user inclinations.
Moreover, Ethereum’s notoriously high gas fees have improved. Average gas costs fell to 1.12 GWEI in March 2025, much lower than in previous years.
However, despite these improvements, Ethereum remains relatively expensive and slower in comparison to newer networks, particularly for users executing smaller transactions.
While Bitcoin ETFs have accumulated more than $36 billion in net inflows this year, Ethereum ETFs have struggled to capture market interest. In March 2025, net flows into ETH ETFs declined by 9.8%, totaling $2.43 billion.
On the trading front, the sentiment surrounding Ethereum appears to be worsening. According to The Kobeissi Letter, short positions in Ethereum surged by 40% in early February and have skyrocketed over 500% since November 2024, marking an unprecedented level of bearish sentiment.
Moreover, Ethereum’s market domination has fallen beneath 8.4%, its lowest in over four years. As noted by Milocredit, a crypto mortgage firm, this suggests capital is exiting ETH for other opportunities, including Bitcoin, Solana, and emerging layer 1 platforms benefiting from Ethereum’s decelerated momentum.
Scalability hurdles are becoming apparent
For years, Ethereum’s growth narrative has relied on promised scalability. However, as of early 2025, this promise has largely gone unfulfilled at the base layer. Despite numerous protocol upgrades, Ethereum’s mainnet processes only between 10 to 62 transactions per second.
As it stands, effective throughput hovers around 16 transactions per second—a stark contrast to Solana’s 4,322 TPS. This disparity has become a significant factor as to why new users and applications prefer alternative networks.
The transition to proof-of-stake through the Merge in 2022 greatly enhanced Ethereum’s energy efficiency, reducing energy consumption by over 99%. Nevertheless, it did little to alleviate core throughput limitations.
Consequently, Ethereum has leaned heavily on layer-2 rollups such as Arbitrum (ARB), Optimism (OP), and Base to expand its operational capabilities. These networks enhance Ethereum’s functionality by processing transactions off-chain and later finalizing them on the mainnet.
While the adoption of L-2 solutions has reduced user costs, it has also sparked unintended consequences. Activity is ebbing from Ethereum’s mainnet, diverting both users and transaction fees towards L-2 ecosystems.
A user on X remarked, “Arbitrum and Optimism are raking in fees… while Ethereum’s base layer is becoming a ghost town.”
This trend is supported by data. Analysts like Geoff Kendrick at Standard Chartered indicate that L2s—particularly high-volume solutions like Coinbase’s Base—are siphoning billions in transaction fees that would typically flow through Ethereum’s mainnet.
Kendrick estimates that Base alone has stripped around $50 billion in value from Ethereum’s market cap by redirecting economic activity. This subsequently reduces the amount of ETH burned through gas fees, undermining its deflationary mechanics and the promoted narrative of ETH as “ultrasound money.”
After the implementation of EIP-1559, Ethereum’s fee-burning mechanism was expected to mitigate new issuance. However, with activity now spilt across numerous rollups and sidechains, overall fee burns have notably decreased.
ETH has reverted to net inflationary status, now at an annualized rate of 0.5%. Meanwhile, staking yields have dipped under 2.5%, diminishing ETH’s attractiveness against stablecoin strategies offering over 4.5% returns across DeFi platforms.
Even Ethereum’s anticipated upgrade, Pectra, which aims to enhance L2 efficiency by increasing blob capacity from three to six for data availability, is unlikely to make a substantial impact.
Kendrick has indicated that he does not foresee Pectra reversing the overarching ETH/BTC decline, arguing that it does not adequately address Ethereum’s fundamental structural issues.
Simultaneously, mainnet activity on Ethereum seems to be dwindling. Bots, particularly address poisoning bots, are increasingly dominating gas consumption on top contracts, resulting in fewer organic applications deploying directly onto the mainnet.
As one user succinctly stated, “ETH mainnet is becoming a graveyard.” While this may be an overstatement, Ethereum’s primary layer is losing its status as the chief hub for on-chain innovation.
Ethereum price forecast: Is the lowest point behind us?
Numerous indicators from market analysts present a broad array of potential outcomes; nonetheless, the risks appear to be accumulating more swiftly for ETH than prospective aids.
On the macroeconomic front, Ethereum’s performance remains significantly correlated with the general risk asset landscape. As Bloomberg strategist Mike McGlone points out, “ETH remains closely tied to risk assets,” meaning its trajectory may reflect movements in U.S. equities and high-beta sectors.
If stock markets decline further in 2025, especially under pressures from elevated interest rates, enduring inflation, or faltering global growth, Ethereum could encounter significant downward momentum.
McGlone cautioned that in a declining macro environment, ETH may “potentially revisit the $1,000 level,” which would signify a nearly 50% decrease from current price levels.
From a technical perspective, the price structure also reveals signs of weakness. Analyst Mags stated that Ethereum exhibits “one of the worst charts of all time,” highlighting its repeated inability to surpass the $4,000 resistance mark during this cycle.
After three attempts, ETH not only failed to regain its highs but also lost support at its mid-range level and dropped beneath an upward-sloping trendline that had been in place since the last market bottom.
This type of breakdown, combined with a lack of robust support beneath current levels, heightens the possibility of a retest in the $1,060 range—a price point last observed during the 2022 bear market. Mags noted that “technically speaking, the bearish scenario appears more likely.”
However, a more optimistic view was presented by trader Michaël van de Poppe, who pointed out that Ethereum might be demonstrating early signs of a potential “deviation.”
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