- ETH/BTC ratio’s fresh lows have fueled a new debate about investing in ETH
- Speculators are still expecting ETH to hit $4k in 2025
Ethereum [ETH] has weakened against Bitcoin for over three years. This can be best evidenced by the ETH/BTC ratio, a metric which tracks ETH’s relative price performance against BTC. It marked a new low of 0.022 recently.
Commenting on the extended decline, Alex Thorn, Galaxy Digital’s Head of Research, stated,
“Ether is down 74% against Bitcoin since switching from proof of work to proof of stake.”
Source: ETH/BTC, TradingView
In fact, some community members have even called for the network to return to PoW (proof-of-work), like BTC, assuming that the altcoin’s value could be propped up again.
Is ETH worth the bet?
For his part, Quinn Thompson, founder of macro-focused hedge fund VC Lekker Fund, believes that ETH is “not worth the investment.” He cited declining network activity, among other reasons.
“Make no mistake, $ETH as an investment is completely dead. A $225 billion market cap network that is seeing declines in transaction activity, user growth and fees/revenues. There is no investment case here.”
Source: The Block
He added that the network has its perks as a utility, but not an investment. Nic Carter, partner at Castle Island Ventures and co-founder of data aggregator Coinmetrics, echoed this sentiment.
In fact, Carter blamed L2s for killing ETH’s value and stated,
“The #1 cause of this is greedy ETH L2s siphoning value from the L1 and the social consensus that excess token creation was A-OK. ETH was buried in an avalanche of its own tokens. Died by its own hand.”
According to Thompson, the ETH/BTC ratio declined by double digits during the 2023-2024 bull cycle and it could be worse off during a bear cycle.
The recent ETF flows also exhibited dislocation between the two top crypto assets. For U.S spot BTC ETFs, the products logged over $1 billion in inflows for 10 consecutive days (Apart from last Friday, which saw $93M outflows).
U.S spot ETH ETFs, on the other hand, have recorded consistent outflows since 20 February, apart from only two days of inflows. In March, they saw over $400M in outflows.
Source: Soso Value
Simply put, the negative sentiment on social media appears to mirror weak institutional investors’ appetite for the altcoin.
That being said, the weak flows couldn’t derail ETH’s recovery odds. On the prediction site Polymarket, bettors’ ETH price target for 2025 is $4k (With the highest volume of $710k). The second-highest volume is for $5k.
For Option traders on Deribit, the $4k target isn’t expected until September (10% chance). At the time of writing, ETH was valued at $1.87k, down 54% from its December highs of $4k.
Source: Deribit