In the sluggish performance of Ethereum in this bull market, Ethereum has been plagued by internal and external troubles this year due to controversies in the Ethereum Foundation's management. To make matters worse, the major Pectra upgrade has been repeatedly delayed in the test network, further undermining community confidence.
The depressed sentiment in the community has been reflected in the Ethereum price, with ETH falling for three consecutive weeks, briefly dipping to $1,752 on the evening of the 11th, a new low since November 2023. ETH, which broke through the $4,000 mark in early December last year, has since fallen by more than 56%. As of the time of writing, it is trading at $1,872, up 0.34% in the past 24 hours.
Ethereum's 24-hour revenue falls out of the top 20
Although Santiment pointed out last week that its social media tracker found Ethereum market sentiment has fallen to its lowest point in the past year, for those patiently holding Ethereum, "the bearish sentiment expressed on social media is a good sign that a turnaround in the crypto market could occur once it stabilizes." It seems optimistic that ETH could bottom out and rebound in the short term.
However, recent indicators show that the Ethereum ecosystem is still mired in a downturn.
According to data from Defillama, Ethereum briefly fell out of the top 20 crypto protocols by 24-hour revenue earlier today, dropping to 21st place, but has since rebounded slightly to 18th place, generating $682,000 in transaction fees and only about $180,000 in actual revenue in the past 24 hours. It was outperformed by the 6th-ranked TRON (24-hour fees and revenue both around $1.81 million), and the 15th-ranked Solana (24-hour fees of $970,000 and revenue of $487,000).
Data from Token Terminal also shows that Ethereum's fee revenue so far this year is around $210 million, ranking 7th, behind Tether ($930 million), TRON ($630 million), Jito ($418 million), Circle ($381 million), Solana ($350 million) and Uniswap ($244 million). This also highlights that Ethereum, which has long been the most profitable participant in the crypto currency, is no longer enjoying its former glory.
In addition, the Ethereum spot ETF has been experiencing capital outflows, with over $540 million flowing out since February 20, indicating weakening demand from Wall Street investors.
Analyst: Ethereum is being repriced as a 'gas fee token'
Crypto analyst Checkmate posted on the X platform today, stating that the ETH/BTC trading pair has been in a downtrend for 78% of trading days. Ethereum is being repriced, returning to its core demand as a 'gas fee token'.
Think about how much gas fee you've consumed in your crypto market career, and then compare it to the peak historical holding amount of that token. Even for those who have hardly set foot in the crypto space, you may be holding 10 to 100 times the actual gas fee demand.
The notion that high gas demand means high token price and market cap is extremely flawed. This is not unique to Ethereum, but a problem that exists for all smart contract L1s.
Without monetary premium, it's not good, and Bitcoin is the top predator of monetary premium, having won the war in the digital asset realm. BTC dominance is rising.
Further reading: Independent View | Why ETH Won't Sustain a Monetary Premium in the Long Run
Has the Altcoin season arrived? Analyst: It's time to sell ETH and move to high beta Altcoins
Notably, Cointelegraph pointed out today that the ETH/BTC ratio has fallen to 0.02281, the lowest level since mid-2020. Crypto trader Alex Kruger analyzed that now may be a good time to sell ETH and buy higher beta Altcoins.
If the market goes down, your losses may be similar in both cases, but if the market goes up, your performance may be significantly better than others, and then you can switch back to BTC.
The "bottoming out" of the ETH/BTC ratio is seen by crypto industry participants as a signal that the Altcoin season may be about to begin. Into The Cryptoverse founder Benjamin Cowen said that for the Altcoin season to arrive, the ETH/BTC ratio needs to bottom out and start rising.
However, other indicators suggest that the Altcoin season may not arrive soon, and Bitcoin may continue to dominate the market in the short term. The CoinMarketCap Altcoin Index (the performance of the top 100 Altcoins relative to Bitcoin over the past 90 days) shows a score of 13/100, indicating a more Bitcoin-friendly season. Crypto trader Hansolar estimates that this year will be "Bitcoin's season" throughout. TradingView data shows that Bitcoin's market dominance is currently 62.15%, while when Ethereum hit a record high of $4,800 in November 2021, Bitcoin's market dominance was around 42%.
