Ethereum vs Bitcoin: A Year-End Review

Since January 1, 2024, Bitcoin (BTC) has rallied 127%, while its nearest rival, Ether (ETH), lagged behind at just 47%. A year-end review is necessary to understand why Vitalik Buterin failed to lead ETH to outperform BTC and other major assets.

For context, Tether’s (USDT) market capitalization increased 52% this year. ETH’s market cap even failed to outperform a stablecoin and has underperformed against XRP, BNB, SOL, and even DOGE.

General Market Performance

Crypto assets are generally ending the year on a high note. The market cap of every top 10 asset has outperformed the S&P 500’s 23% year-to-date rise. Notably, ETH bidders hit $4,000 offers for the first time since 2021 and saw no major hacks or downtime.

ETH’s Wins, Losses, and Major Developments

Dencun and Proto-Danksharding

In March 2024, Ethereum’s major Dencun fork activated, introducing proto-danksharding to enhance data management and lower costs for layer 2 roll-ups. Although the activation was largely smooth, a bug was detected prior to the launch on the Goerli testnet.

Dencun has not generated excitement comparable to the much-anticipated merge to proof-of-stake and did not provide the necessary boost for ETH to compete against BTC.

Beam Chain Proposal

Another key milestone was Justin Drake’s proposal of Beam Chain at Ethereum’s Devcon conference. Beam Chain could update or replace Ethereum’s Beacon Chain and alleviate issues associated with maximum extractable value (MEV). However, it remains only a proposal and has not driven ETH’s price beyond that of BTC.

EIP-7809 and Native Tokens Proposal

EIP-7809 was introduced to treat Ethereum-based tokens like ETH. Although it offers new tools for developers, it has not significantly affected the overall market cap of ETH.

US Spot ETH ETFs

Following the approval of BTC spot ETFs, the SEC approved the first ETH spot ETFs, attracting $107 million in inflows on the first day. However, total net inflows were pegged at just $2.4 billion, equating to less than 0.6% of ETH’s market cap.

Mekong Testnet

On November 7, 2024, the Ethereum Foundation launched the Mekong testnet, featuring planning for the upcoming Pectra fork. Despite its technical significance, Mekong did not accelerate ETH’s price growth faster than BTC in the year’s last weeks.

Conclusion: A Disappointing Year for ETH

Despite many positive developments, including US spot ETH ETFs, Ethereum retained its second-place ranking but fell short of BTC’s performance. BTC outperformed ETH by over 80% and increased its size by over $1 trillion compared to ETH’s $130 billion. At the start of the year, BTC represented 48%, while ETH accounted for 16% of the coins on CoinGecko. Today, BTC’s dominance rose to 55.1%, while ETH’s dipped to 11.7%.