Despite a constantly shrinking supply, and arguably greater number of use-cases, Ethereum network’s native coin – ether (ETH) – continues to underperform Bitcoin (BTC). Latest exchange data received on Wednesday explains the potential reasons behind the unimpressive performance.
Why is ETH performing poorly against BTC?
According to exchange data, ETH is showing a widening gap between supply restraint and economic demand. For instance, ETH exchange reserves have fallen from roughly 16.8 million to 15.1 million over the past month.
Similarly, the Ethereum network staking rate has surged from slightly under 30 percent to 33.9 percent as of Wednesday, suggesting that an increasing amount of ETH is now staked on the network, with fewer quantities available on centralized exchanges.
While on the surface it indicates that fewer ETH are available on the market for immediate sell-off, staked ETH can still be used to gain economic liquidity through liquid-staking tokens and derivatives.
Meanwhile, demand indicators for ETH remain weak across the board. Total fees burned ended near 11.9 ETH after several temporary activity spikes earlier in the year. Such a low burn implies that base-layer usage is not generating enough fee pressure to support a strong scarcity narrative.
It is worth recalling that JPMorgan previously identified weak user-activity metrics as a particular sensitivity for ETH, while noting that stablecoin and tokenisation growth could eventually improve demand.
At the same time, the Coinbase premium for ETH remains in the negative territory – around -0.106, indicating weak demand for the digital asset in the U.S. Funding is still positive at approximately 0.0021 despite ETH trading near $1,800.
The slightly positive funding rate suggests that ETH traders are still paying to maintain long exposure to the digital asset without any meaningful confirmation from the U.S. spot markets, or improving network economics.
Still some hope for ETH
All is not yet lost for ETH, as a reclaim of the $1,800 price level could pave the way for the cryptocurrency to target $2,000. Although ETH has been struggling against BTC, a clear breakout from major resistance levels could build the foundation for an altseason.
Technical patterns already suggest positive momentum for ETH. On Thursday, ETH printed a double bottom pattern on the weekly chart, hinting that it could be on the verge of a massive breakout to the upside.
