The ETH/BTC ratio just fell below 0.022, reaching its lowest point since December 2020—raising questions about Ethereum’s place in the Layer 1 (L1) race as rivals like Solana gain momentum.
Ethereum Struggles as ETH/BTC Ratio Hits Multi-Year Low
Ethereum (ETH), the world’s second-largest cryptocurrency by market cap, is feeling the pressure. Its value relative to Bitcoin (BTC) has dropped sharply, with the ETH/BTC ratio slipping to 0.022—levels not seen since late 2020.
Back in September 2022, the ratio was around 0.085. Since then, Ethereum has lost over 73% of its value compared to Bitcoin. As of now, ETH trades near $1,880—down 9% in the past week and a steep 62% from its November 2021 all-time high of $4,890.
While Bitcoin is down just 10% year-to-date, Ethereum has plunged 46%, signaling a major performance gap.
This weakening ratio reflects Ethereum’s slipping dominance in the L1 and smart contract space—a domain it once led. With other blockchains like Solana, Binance Chain, and Avalanche gaining traction, Ethereum seems to be losing its edge.
Let’s explore what’s driving this shift—and whether Ethereum is truly falling behind.
Ethereum’s On-Chain Metrics Continue to Soften
As of April 1, Ethereum holds around $50.5 billion in total value locked (TVL), representing 52.5% of the DeFi market—down from 61.64% in February 2024. Meanwhile, Solana’s share has jumped from 2.84% to 7.24%, pushing its TVL to $6.69 billion—a 2.5x surge in just over a year.
User behavior across these networks is evolving. Ethereum still attracts DeFi users engaged in passive activities like staking and yield farming. In contrast, Solana is drawing in high-frequency traders and meme coin speculators—suggesting retail activity is shifting away from Ethereum.
Gas fees, once a major complaint for Ethereum, have improved. In March 2025, average gas prices dropped to just 1.12 GWEI. But even with lower costs, Ethereum remains relatively slow and pricey compared to newer chains—especially for small transactions.
Adding to the concern, Ethereum ETFs have struggled to gain traction. In March 2025 alone, net flows into ETH ETFs dropped 9.8%, down to $2.43 billion. Bitcoin ETFs, by contrast, have pulled in over $36 billion to date.
Sentiment is also souring. According to The Kobeissi Letter, short positions on Ethereum surged 40% in early February and have spiked over 500% since November 2024, marking historic levels of bearish sentiment.
Ethereum’s market dominance has now dropped below 8.4%—its lowest point in more than four years. According to Milocredit, a crypto mortgage platform, this suggests investors are reallocating capital toward Bitcoin, Solana, and other rising L1s.
Scaling Promises Fall Short, and L2s Take Over
Ethereum’s long-standing promise of scalability is still unfulfilled at the base layer. As of early 2025, despite protocol upgrades, the mainnet only handles 10 to 62 transactions per second. Its effective throughput is about 16 TPS—far behind Solana’s 4,322 TPS.
While the shift to proof-of-stake (The Merge) in 2022 drastically reduced energy use, it didn’t solve Ethereum’s throughput issues. As a result, Ethereum has leaned heavily on layer-2 solutions like Arbitrum, Optimism, and Base to manage scaling.
Though L2s have helped lower costs, they’ve also shifted activity and fees away from the Ethereum mainnet. As one user on X put it, “Arbitrum and Optimism are raking in fees… while Ethereum’s base layer is turning into a ghost town.”
Data backs this up. Standard Chartered’s Geoff Kendrick estimates Coinbase’s Base alone has diverted around $50 billion worth of value away from Ethereum’s mainnet. This has significantly reduced fee burns, which weakens Ethereum’s “ultrasound money” narrative.
Since EIP-1559, Ethereum burns a portion of transaction fees, meant to offset new issuance. But with most activity moving to L2s and sidechains, burned fees have dropped—and ETH has once again become net inflationary, with an annualized rate of 0.5%.
Meanwhile, staking yields are now below 2.5%, which looks uncompetitive compared to DeFi stablecoin strategies offering over 4.5%.
Even Ethereum’s next major upgrade, Pectra, which plans to double data blobs (from 3 to 6) for better L2 efficiency, may not be enough. Kendrick believes it won’t reverse ETH’s decline relative to BTC, calling it insufficient to fix Ethereum’s underlying problems.
Activity on Ethereum’s mainnet is slowing. Bots, especially address-poisoning bots, now dominate gas usage. Organic deployments and innovation on the base layer are becoming rare.
As one user put it: “ETH mainnet is becoming a graveyard.” It may be an exaggeration—but it captures the growing sentiment that Ethereum is no longer the go-to network for on-chain experimentation.
Ethereum Price Outlook: Is the Bottom in Sight?
Market analysts are divided on where ETH goes next, but for now, the risks seem to outweigh the potential rewards.
On the macro side, Ethereum remains closely tied to risk assets. Bloomberg’s Mike McGlone noted that ETH continues to follow trends in equities and high-beta tech. If the stock market weakens under high interest rates or slowing growth, Ethereum may struggle further.
McGlone even suggested that in a worst-case scenario, Ethereum could drop back to $1,000—a nearly 50% fall from current levels.
From a technical angle, the chart isn’t promising either. Analyst Mags called Ethereum’s chart “one of the worst of all time,” pointing out repeated failures at the $4,000 resistance and a recent break below key trendlines.
If this breakdown continues, ETH could revisit support near $1,060—the price last seen during the 2022 bear market.
On the flip side, trader Michaël van de Poppe believes ETH could be forming a bullish deviation. If Ethereum can climb past the $2,100–$2,150 zone, it might trigger a rally to $2,800. He also cited the weakening U.S. Dollar Index as a potential bullish catalyst.
Still, any upward momentum depends on ETH reclaiming key levels and broader market sentiment improving. Until that happens, downside pressure remains the dominant force.
For now, Ethereum’s future hinges on both macroeconomic trends and whether Bitcoin maintains its lead. A strong move above $2,150 could signal recovery—but without it, the path forward looks rocky.
As always, trade cautiously and never invest more than you’re willing to lose.
