ETH/BTC Ratio Hits Lowest Level Since 2020: Ethereum Faces Challenge From Rivals

Ethereum (ETH), the world's second-largest cryptocurrency by market capitalization, is going through a rough patch as the ETH/BTC ratio has dropped to 0.022, its lowest level since December 2020. This reflects a significant decline in Ethereum's relative performance compared to Bitcoin (BTC).

Ethereum's Performance Decline
Over the past three months, Ether's price has fallen by 40%, while other coins such as Bitcoin, Solana, and Cardano have outperformed. The rise of memecoins and the growing popularity of the Solana blockchain, with its high speed and cost efficiency, have attracted investors' attention, reducing interest in Ethereum.

Transaction Fees and Scalability Challenges
Ethereum gas fees peaked at 70 gwei on February 9, 2024, with some transactions as high as 377 gwei. This increase was driven by the growth of DeFi, the popularity of the ERC-404 token standard, and the resurgence of the NFT market. While Layer-2 solutions like Arbitrum and Optimism have helped reduce transaction fees to around $0.01, widespread implementation and adoption are still in development.

Pectra Upgrade and the Future of Ethereum
To address scalability issues, Ethereum is preparing for the Pectra upgrade, which is expected to roll out in late 2024 or early 2025. This upgrade will introduce EIP-7742, which will allow dynamically adjusting the number of “blobs” in transactions, aiming to improve the performance of Layer-2 solutions and reduce transaction fees.

Competition from other blockchains
The rise of blockchains like Solana has posed a major challenge to Ethereum. Solana has attracted attention for its fast transaction speeds and low fees, causing many projects and developers to turn to the platform. This raises questions about Ethereum’s ability to maintain its leadership in the smart contract and DeFi space.

Conclusion
Ethereum is facing many challenges from both inside and outside. Declining ETH/BTC ratio, high transaction fees, and competition from other blockchains have created an urgent need for Ethereum to innovate and upgrade its system. The upcoming Pectra upgrade may be a major step forward, but maintaining and strengthening Ethereum’s position in the cryptocurrency market requires constant innovation and adaptation to an increasingly competitive environment.