A look back at the history of Bitcoin and Ether
In 2024, Bitcoin (BTC) behaved like a bulldozer. The king of Web3 saw its price rise from $44,000 to nearly $95,000 in twelve months, an increase of +120%. Ether (ETH), despite being driven by multiple catalysts (protocol improvements, DeFi narratives, the Dencun update), rose by "only" +55%, from $2,350 to around $3,350.
This performance differential resulted in a sharp drop in the ETH/BTC ratio, which fell from 0.05 to around 0.035 between January and December. In short, even though ETH was rising, it was being overtaken by a faster, more massive and more sought-after Bitcoin. The year 2025 got off to a bad start for the entire industry. In early January, Donald Trump's decision to reinstate massive tariffs on a wide range of imported goods sent shockwaves through all risky assets. Stock markets plummeted, commodities fell, and crypto took a hit. But in this macroeconomic storm, excluding stablecoins, Bitcoin acted as a safe haven in the crypto ecosystem.
From January 1 to March 31, 2025, the price of BTC fell by 11.8%, from $94,000 to around $82,500. Meanwhile, Ethereum plunges 45%, from $3,336 to $1,805 over the same period. In three months, ETH erases all of its 2024 gains. In recent days, against a backdrop of macroeconomic calm, ether has regained ground, rising from $1,800 to $2,500 in the space of a week, but it is still trading 47% below its all-time high in 2021. Let's look at the main reasons for this underperformance.
MarketScreener
Institutional adoption and investment flows
January 10, 2024 marks a key date: the US SEC finally approves the first spot ETFs backed by physical bitcoin. This regulatory revolution allows traditional investors to gain exposure to BTC without going through a crypto exchange. BlackRock, Fidelity, Ark Invest... asset management giants are rushing to offer these products. The result: billions of dollars in net inflows, an explosion in assets under management, and BTC soaring to a new high in March 2024.
SoSo Value
Ether, meanwhile, is a latecomer to the party. It is not until the summer of 2024 that the SEC begins to approve spot ETFs backed by ETH. Several funds are approved, but with significant restrictions: no staking — staking involves locking cryptocurrencies (such as ETH) into a blockchain protocol to validate transactions and secure the network in exchange for rewards — to avoid legal disputes, limited amounts, and cautious strategies. By the end of 2024, ETH ETFs had only about $6 billion in assets under management, far from the tens of billions drained by Bitcoin ETFs.
SoSo Value
Beyond the figures, the psychological dynamic is palpable. Bitcoin is now seen as a regulated, secure and now legitimized store of value. Ether, on the other hand, remains in a gray area. Its legal status in the United States is not clearly defined as either a "commodity" or a "security." This regulatory uncertainty is holding back some asset managers, who prefer to turn to the king of assets.
On-chain data confirms this trend. According to CryptoQuant, between February and May 2025, more than 400,000 ETH left institutional wallets (funds, ETFs, etc.). At the same time, the number of ETH staked, after peaking at 35 million in November 2024, fell back to 34.4 million in early 2025. This is a modest but revealing decline: some large holders are reducing their exposure.
Even in terms of concrete adoption, Ethereum is suffering. The rebound of DeFi in 2024 was not enough to sustain activity on the network in the long term. Ethereum's TVL (TVL = the total value locked in dollars in a blockchain's decentralized applications) fell by 35% in Q1 2025, mainly due to the decline in the price of ETH. Its market share in decentralized finance (DeFi) falls from 63% to 53%, eroded by Solana, Arbitrum, and others. NFTs? Still dormant since 2022. Staking? In slight decline. Layer 2 ? Growing strongly, but this does not directly benefit ETH as an asset.
Technological developments (scalability, Ethereum 2.0, Layer 2, etc.)
Since "The Merge" in September 2022, Ethereum has embarked on the most ambitious technical transformation in its history. The transition from energy-intensive Proof of Work to Proof of Stake, which has drastically reduced the network's power consumption, marked a turning point: ETH issuance on the network has fallen dramatically, energy consumption has plummeted, and the future of the protocol has gradually taken shape around scalability, i.e., the ability of a blockchain to process a large number of transactions quickly and at low cost without compromising its security or decentralization.
Etherscan
In April 2023, the "Shanghai" update allowed the withdrawal of staked ETH ("staked" means that ETH has been locked up (deposited) by users to participate in the validation of transactions on the Ethereum blockchain, in exchange for rewards), which had previously been locked.
And a year later, in March 2024, Ethereum deployed "Dencun," a merger of the Cancun and Deneb updates ("hard forks" for insiders), which laid the groundwork for the upcoming sharding (sharding is a technique that aims to divide the blockchain into subnetworks called "shards" in order to process multiple transactions in parallel and thus improve Ethereum's scalability) and optimizes the data used by second-layer solutions (Layer 2), significantly lowering transaction fees.
This technically acclaimed progress has, however, had an unexpected economic consequence: a dramatic drop in ETH burn. "ETH burn" refers to the deliberate destruction of a portion of transaction fees paid in ether (ETH), which reduces the total supply in circulation.
Since EIP-1559 (August 2021), Ethereum has been burning a portion of transaction fees, making its supply potentially deflationary. But in 2024, with fees significantly reduced, the volume of ETH destroyed collapsed. As a result, the total supply has risen again, from +0.3% to +0.5% over the year, contrary to the promise of "ultra-sound money." — The concept of "ultra sound money" refers to a cryptocurrency, such as ether (ETH), whose supply becomes deflationary (it decreases over time), making it even rarer than gold or bitcoin, often referred to as "sound money."
At the same time, Layer 2 solutions such as Arbitrum, Optimism, and Base have taken off. Their volumes are exploding, capturing a growing share of Ethereum's traffic and usage. While this relieves congestion on the main chain, it also limits its revenue: fewer transactions, fewer fees, less ETH burned. The paradox of Ethereum is becoming clear: the more it modernizes, the less its token benefits directly.
On-chain data bears this out. In 2024, despite a rise in crypto prices, the number of transactions and active addresses on Ethereum remains stagnant. Engagement on the base layer has not returned to the excitement of 2021, and the value captureable by ETH seems disconnected from the growth of its ecosystem.
Glassnode
Faced with this technical and economic complexity, Bitcoin is playing a different tune. Its strategy is one of continuity: no major updates since Taproot in 2021, no changes to the consensus. Bitcoin remains the benchmark for proof of work, stable, predictable, and reassuring for traditional investors. But Ethereum still has a long way to go, and could well attract users and investors back in droves. A comprehensive update on the future of Ethereum will be available soon in the columns of MarketScreener.
