Ethereum's Underperformance Against Bitcoin, Solana Means It 'Will Need More Demand Sources,' Says Trader

Pseudonymous trader Evanss6 shared his thoughts on Ethereum’s ETH/USD recent underperformance, the challenges it faces on multiple fronts and the potential catalysts that could drive its future growth and adoption.

What Happened: The trader acknowledges Ethereum’s poor trading performance over the past year, with its local top against the Bitcoin BTC/USD trading pair occurring around the Merge in late 2022. In the past year, ETH accumulated 62% gains compared to Bitcoin's 130% and Solana's SOL/USD 600%.

Despite the favorable supply dynamics resulting from the "triple halving," the trader attributes ETH’s underperformance to a less favorable imbalance between buyers and sellers compared to competitors like BTC and SOL.

The trader points out that Ethereum was an extremely consensus position at the time of the Merge, with widespread ownership and usage across various crypto sectors. However, since then, Ethereum has been losing ground on three fronts: competition from Bitcoin, Solana and regulatory challenges.

Also Read: The Dencun Dilemma: Can Lower Fees Derail Ethereum’s Deflationary Ambitions And Dampen Prospects Of A Price Surge?

Bitcoin's Real Tradfi Acceptance, Solana's Meme Coin Frenzy

Bitcoin has gained real TradFi acceptance through ETF approval, taken NFT share via ordinals and developed its ecosystem of “L2s.”

Solana, on the other hand, has already priced in the worst, caught up in various metrics, become the primary platform for meme coin trading, and achieved consensus status. "Solana is now consensus. That doesn’t mean it’s bad. It’s just no longer contrarian like it was from $10 to $30 or so," Evanss6 states, adding that he plans to continue holding SOL as a top position until he sees a reason not to.

Regulatory Challenges

Ethereum faces challenges as the SEC investigates its security status, the market has priced out spot ETH ETF approval, and the Biden administration’s stance on stablecoins and crypto appears unfavorable.

Evanss6 highlights several positive developments for Ethereum despite the challenges it faces.

• Larry Fink’s push for the tokenization narrative and an Ethereum spot ETF
• Potential for a crypto-friendly Trump administration
• Rise of L2s like Base and Blast
• Concentration of SocialFi in the Ethereum ecosystem
• Recent upgrades that have improved scalability and developer experience

Ethereum's Need

The trader believes that Ethereum will need more demand sources, with the ETF being a major step towards unlocking new capital flows. He emphasized the importance of continued L1 optimizations and a coherent narrative around "programmable money" and "institutional-grade tokenization platform."

What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19. Read Next: Why Grayscale Could Be The Spark ETH Needs: 10x Research

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image created using artificial intelligence with Midjourney.