Ethereum’s blockchain underwent a significant shift on September 15, 2022, moving from a proof-of-work (PoW) security model to proof-of-stake (PoS).
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This change, known as “The Merge,” was expected to usher in a new era for Ethereum (ETH), with the goal of reducing its energy consumption and positioning ETH as a deflationary asset, or “ultrasound money.” However, since then, Ethereum’s performance, particularly in comparison to Bitcoin (BTC), has been disappointing.
When Ethereum transitioned to PoS, the value of ETH relative to BTC was 0.074 BTC per ETH. Fast forward to today, and that ratio has drastically dropped to just 0.022 BTC, marking a staggering 70% decline in value. This is a significant underperformance considering the promise of Ethereum’s new model.
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Ethereum’s market cap dominance has also taken a hit. At the time of the Merge, ETH represented 17.7% of the total cryptocurrency market cap, while Bitcoin held 37.6%. Since then, ETH’s dominance has shrunk drastically, falling to just 8%, while Bitcoin’s market dominance has surged to 58.9%.
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The so-called “flippening” — when ETH was expected to surpass BTC in market cap — has become even more distant. At the time of the Merge, Ethereum was 44.4% of the way toward overtaking Bitcoin, needing just a 2.3x rally to do so. Today, however, that ratio has plummeted to 13.8%, meaning Ethereum would need a 7.3x rally to flip Bitcoin.
Alexander Stefanov
