Ethereum Struggles Post-Merge as Bitcoin Continues to Outperform
Since Ethereum completed its transition to a proof-of-stake (PoS) system in 2022, commonly known as The Merge, its market performance has continued to lag behind Bitcoin. While Ethereum’s upgrades have improved network efficiency and sustainability, they have done little to boost its price significantly. Instead, investors seem to be favoring Bitcoin, which has shown stronger market momentum and institutional adoption.
Ethereum Underperforms Bitcoin in the Market
As of January 29, 2025, Ethereum (ETH) is trading at $3,109.02, reflecting a 2.3% decrease from the previous close. In contrast, Bitcoin (BTC) stands at $102,052.00, down only 0.76% in the same period. This underperformance continues a broader trend observed since The Merge, with ETH struggling to keep pace with BTC’s price action.
Over the past year, Bitcoin has surged by nearly 80%, fueled by increasing institutional interest and the launch of several spot Bitcoin exchange-traded funds (ETFs). Meanwhile, Ethereum has only seen a 35% gain, underperforming not only Bitcoin but also other emerging blockchain projects such as Solana and Avalanche.
Ethereum ETFs Face Limited Investor Enthusiasm
One of the key drivers behind Bitcoin’s stronger performance has been the overwhelming demand for Bitcoin ETFs. Since their launch on January 11, 2024, U.S.-based Bitcoin ETFs have attracted over $5.2 billion in net inflows within the first 27 days of trading. In stark contrast, Ethereum-based ETFs, which became available on July 23, 2024, have struggled to gain traction, witnessing net outflows of approximately $480.4 million in the same period.
This discrepancy highlights Bitcoin’s dominant position in institutional portfolios, as investors perceive it as the more stable and established asset compared to Ethereum. While Ethereum ETFs offer exposure to the second-largest cryptocurrency, their demand remains inconsistent, suggesting that institutional players are yet to be fully convinced of ETH’s long-term value proposition.
Rising Competition from Low-Cost Blockchains
Another challenge Ethereum faces is growing competition from newer blockchain platforms with lower transaction fees. As gas fees on Ethereum remain relatively high compared to alternatives like Solana, Binance Smart Chain, and Tron, users are increasingly shifting their activities away from Ethereum.
A clear example of this trend is the rise of meme coins on cost-effective networks. In 2024, the majority of new meme coins were issued on Solana, thanks to its lower fees and faster transactions. Ethereum, once the go-to network for token launches, has seen a decline in this activity, as retail investors and developers look for more economical alternatives.
Ethereum Retains Strength in Stablecoins
Despite its struggles in market performance and blockchain competition, Ethereum continues to dominate in one crucial area: stablecoins. The total supply of USDT (Tether) on the Ethereum network reached $60.7 billion as of December 4, 2024, surpassing Tron’s $59.5 billion for the first time in nearly two years.
This shift signals Ethereum’s enduring strength as a trusted settlement layer for high-value transactions, especially for institutional players. While Tron has historically led in stablecoin transactions due to its low fees, Ethereum’s regained dominance in USDT supply suggests a preference for its more decentralized and secure infrastructure.
Ethereum’s post-Merge journey has been marked by underwhelming price performance, inconsistent ETF demand, and growing competition from lower-cost blockchains. Although it remains a key player in the crypto space, particularly in the stablecoin market, ETH’s long-term investment appeal continues to be questioned.