The ratio between Ethereum (ETH) and Bitcoin (BTC) has dropped to levels last seen in early 2023, intensifying debate among analysts over whether the world’s second-largest cryptocurrency is undervalued or facing prolonged structural decline.
The ETH/BTC ratio fell to approximately 0.027 this week, down more than 35% from its August 2025 peak of 0.043 and well below its 200-week moving average. The decline means one Bitcoin now buys roughly 37 ETH, compared to just 11 in December 2021 when Ethereum was at its most competitive relative to BTC.
Ethereum’s price is down approximately 40% year-to-date, a far steeper fall than Bitcoin’s 25% decline over the same period. ETH currently trades around $1,730, sitting some 60% below its all-time high of $4,953 reached in August 2025.
Analysts have identified several structural factors driving the persistent gap. Spot Bitcoin ETFs have accumulated over $54 billion in net inflows since launching in early 2024, creating a consistent institutional bid that has no equivalent for Ethereum. Spot Ethereum ETF products, by contrast, recorded a 17-day consecutive outflow streak through June before briefly reversing, with total redemptions this year exceeding $1.5 billion.
Ethereum’s heavier correlation to tech equities is also a factor. ETH tracks the Nasdaq 100 at a coefficient of 0.78 versus Bitcoin’s 0.55, meaning macro risk-off events hit Ethereum harder. The May-June geopolitical tensions from the US-Iran conflict triggered significant de-risking from technology assets, amplifying ETH’s underperformance.
Layer-2 networks pose an additional challenge. Platforms including Base, Arbitrum and Optimism process transactions cheaply and divert fee revenue away from Ethereum’s main chain. Standard Chartered estimated that Coinbase’s Base alone removed roughly $50 billion from ETH’s market capitalisation by redirecting transaction fees from the mainnet. The “ultrasound money” narrative built around Ethereum’s fee-burning model has weakened as a result.
Corporate treasury demand also favours Bitcoin. Strategy alone holds over 845,000 BTC and continues purchasing on price dips. Ethereum has no comparable institutional buyer creating structural floor support.
Not all analysts are bearish. Standard Chartered has maintained a price target of $4,000 for ETH by December 2026, arguing there is a significant mismatch between current prices and rising network usage. Ethereum processed a record 200.4 million transactions in Q1 2026, up 81.5% year-on-year, while monthly active users grew 53.5% quarter-on-quarter to 13.2 million.
Exchange reserves for ETH also fell to a 10-year low of 14.5 million tokens as of mid-June, suggesting large holders are accumulating rather than selling. Morgan Stanley filed an amendment with the SEC this week to launch an Ethereum ETF, a move analysts say could bring fresh institutional demand if approved.
The Glamsterdam upgrade, targeting late Q3 2026, is expected to raise Ethereum’s gas limit substantially and cut transaction fees by approximately 78%, addressing the Layer-2 fee competition that has weighed on its value accrual story. Markets have not yet priced in the upgrade, with analysts pointing to previous missed timelines as a reason for caution.
