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Ether (<a href="https://cointelegraph.com/ethereum-price" rel="noopener noreferrer nofollow" target="_self">ETH</a>) has dropped nearly 70% versus Bitcoin (<a href="https://cointelegraph.com/bitcoin-price" rel="noopener noreferrer nofollow" target="_self">BTC</a>) since the Merge, weakening Ethereum’s market position and raising questions about its price outlook.
<figure><img alt="'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge" src="https://s3.cointelegraph.com/uploads/2025-02/0194cfe3-7d3a-7930-bc06-181ea91825fe" title="">
 <figcaption style="text-align: center;">
 ETH/BTC weekly performance chart. Source: TradingView
 </figcaption>
</figure>
Ethereum’s <a href="https://cointelegraph.com/learn/articles/ethereum-upgrades-a-beginners-guide-to-eth-2-0" rel="noopener noreferrer nofollow" target="_self">transition to proof-of-stake (PoS)</a> in September 2022 aimed to be a game-changer for the network.
It promised to improve energy efficiency and make ETH a “<a href="https://cointelegraph.com/explained/ethereum-as-a-deflationary-asset-explained" rel="noopener noreferrer nofollow" target="null">deflationary</a>” asset by reducing its supply over time, with some analysts predicting it would <a href="https://cointelegraph.com/news/ether-s-growth-as-independent-asset-fuels-eth-btc-flippening-narrative" rel="noopener noreferrer nofollow" target="_self">flip Bitcoin’s market cap</a>.
However, more than two years later, Ethereum’s performance tells a different story, as Bitcoin has gained around 160% against Ether since the Merge.
<figure><img alt="Markets, Tech Analysis, Market Analysis, Ethereum 2.0, Ether Price, Ethereum Price" src="https://s3.cointelegraph.com/uploads/2025-02/0194d0cd-16a1-776f-8679-2cbe69f0f4e5" title="">
 <figcaption style="text-align: center;">
 BTC/ETH performance since the Merge. Source: TradingView
 </figcaption>
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<h2 id="eth-supply-rate-near-positive-2-5-years-after-merge">ETH supply rate near positive 2.5 years after Merge</h2>
As of Feb. 4, Ethereum’s supply growth rate was hovering near 0%, according to <a href="https://ultrasound.money/?timeFrame=since_merge" rel="noopener noreferrer nofollow" target="_blank">UltraSound.Money</a>, showing that the Merge’s disinflationary effect has stalled despite initially reducing Ether’s supply.
<figure><img alt="'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge" src="https://s3.cointelegraph.com/uploads/2025-02/0194cfed-403f-74b8-96c2-4c307731f17c" title="">
 <figcaption style="text-align: center;">
 Source: <a href="https://x.com/Leishman/status/1886196430961799626" rel="noopener noreferrer nofollow" target="_blank">X</a>
 </figcaption>
</figure>
At its best, the supply rate was -0.37% in April 2024.
Ethereum’s deflationary mechanism relies heavily on <a href="https://cointelegraph.com/news/the-ethereum-improvement-proposal-1559-is-the-squeeze-worth-the-juice" rel="noopener noreferrer nofollow" target="_self">EIP-1559</a>, which burns a portion of transaction fees. However, as onchain activity decreases, gas fees drop, leading to fewer ETH burns.
Data from Token Terminal <a href="https://tokenterminal.com/explorer/projects/ethereum?v=NDZmYjEyNjUxMjY0ZTYyZTA1NzAyNjJm" rel="noopener noreferrer nofollow" target="_blank">illustrates</a> this trend. Ethereum’s average transaction fee peaked above $15 in March 2024 but saw a sharp decline by April, dropping below $5.
<figure><img alt="'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge" src="https://s3.cointelegraph.com/uploads/2025-02/0194cff4-4fca-7966-9df1-8199501ac5d0" title="">
 <figcaption style="text-align: center;">
 Ethereum average transaction fees (1-year). Source: Token Terminal
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The downward trend persisted throughout mid-2024, reflecting a steady decrease in network demand. While fees stabilized in late 2024 and early 2025, they now remain well below previous highs, resulting in a rising Ether supply.
<h2 id="investors-offloading-ethereum-on-chain-data">Investors offloading Ethereum:&nbsp;On-chain data</h2>
Ethereum’s long-term holders have reduced their exposure since the Merge, according to <a href="https://x.com/joao_wedson/status/1886623582362492983" rel="noopener noreferrer nofollow" target="_blank">data shared</a> by Joao Wedson, CEO of Alphractal.
Alphractal’s data shows that wallets holding 100,000 ETH or more have massively decreased their holdings, while addresses with 1 million ETH have also decreased.
<figure><img alt="'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge" src="https://s3.cointelegraph.com/uploads/2025-02/0194cffc-89cd-7186-899f-579d18cf0c79" title="">
 <figcaption style="text-align: center;">
 Ethereum addresses with a minimum 1M and 100K ETH balance. Source: Alphractal
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“Long-Term and Short-Term Holders stopped accumulating ETH since September 2022,” Wedson said, adding:
<blockquote>
 “Even Exchange addresses, former miners, and funds with over 100k ETH aren’t buying.”
</blockquote>
<figure><img alt="'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge" src="https://s3.cointelegraph.com/uploads/2025-02/0194cffd-72e7-7ce0-b593-2cb1df84666b" title="">
 <figcaption style="text-align: center;">
 Ethereum supply age bands. Source: Alphractal
 </figcaption>
</figure>
The data suggest that major holders may be losing confidence in ETH’s long-term outlook. In contrast, Bitcoin wallets holding 100,000 BTC and 1 million BTC have increased substantially since the Merge.
<figure><img alt="'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge" src="https://s3.cointelegraph.com/uploads/2025-02/0194d008-b717-76ea-b01e-2e59f9070814" title="">
 <figcaption style="text-align: center;">
 Bitcoin wallets with a minimum balance of 100K and 1 million BTC. Source: Glassnode
 </figcaption>
</figure>
The result in increasing market share for Bitcoin and Solana (<a href="https://cointelegraph.com/solana-price-index" rel="noopener noreferrer nofollow" target="_self">SOL</a>), as well as other high-growth ecosystems.
Solana, in particular, has emerged as Ethereum’s biggest rival, attracting DeFi and NFT projects that might have otherwise launched on Ethereum. It <a href="https://cointelegraph.com/news/solana-drinks-ethereum-milkshake-dex-dominance-rises-okx" rel="noopener noreferrer nofollow" target="null">now commands nearly half of the DEX market</a>, fueled by the <a href="https://cointelegraph.com/news/solana-memecoin-pump-fun-trump-volume-record" rel="noopener noreferrer nofollow" target="_self">Pump.fun memecoin</a> launchpad, which recently surpassed Ethereum in daily volume.
<figure><img alt="'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge" src="https://s3.cointelegraph.com/uploads/2025-02/0194d00c-f4a0-7f5e-bbaf-d7a3eb8e0120" title="">
 <figcaption style="text-align: center;">
 SOL/ETH weekly price performance chart. Source: TradingView 
 </figcaption>
</figure>
Wedson adds that the Merge is “the worst thing that happened to Ethereum.”
However, Ethereum co-founder Joseph Lubin <a href="https://x.com/ethereumJoseph/status/1886524444996235617" rel="noopener noreferrer nofollow" target="_blank">refers</a> to Ether’s underperformance as regular market cycle occurrence, saying:
<blockquote>
 “What we are seeing is whales taking advantage of economic turmoil and negative sentiment to shake out weak hands, run stops, and then buy back when they can run that same playbook in reverse.”
</blockquote>
Not everyone agreed, however, as traders are increasingly noticing that ETH is losing ground against BTC each time the latter crosses the $100,000 mark.
<figure><img alt="Markets, Tech Analysis, Market Analysis, Ethereum 2.0, Ether Price, Ethereum Price" src="https://s3.cointelegraph.com/uploads/2025-02/0194d03a-0bb9-7116-8664-29167c1ae2f3" title="">
 <figcaption style="text-align: center;">
 Source: <a href="https://x.com/Irenezhao_/status/1886442827825172746" rel="noopener noreferrer nofollow" target="_blank">X</a>
 </figcaption>
</figure>
<h2 id="can-eth-btc-recover">Can ETH/BTC recover?</h2>
Ethereum’s weekly chart shows ETH/BTC in oversold territory, according to the Relative Strength Index (<a href="https://cointelegraph.com/news/here-s-3-ways-the-relative-strength-index-rsi-can-be-used-as-a-sell-signal" rel="noopener noreferrer nofollow" target="_self">RSI</a>). Simultaneously, the pair is trading near a historical support area defined by the 0.024-0.023 BTC range.
<figure><img alt="'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge" src="https://s3.cointelegraph.com/uploads/2025-02/0194d01b-d0aa-75df-b875-5b900b985336" title="">
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 Edit the caption here or remove the text
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Both indicators have led to bounces in the past, signaling that a relief rally could be on the horizon in the coming weeks. In this case, ETH/BTC can rise toward its 50-week exponential moving average (50-week EMA; the red wave) at around 0.042 BTC by March or April.
Related: <a href="https://cointelegraph.com/news/ethereum-needs-blockchain-growth-to-reclaim-all-time-high" rel="noopener noreferrer nofollow" target="_self">Ethereum needs more blockchain activity, adoption, to recapture $4K</a>
However, since Ethereum’s long-term bearish trend remains intact, a decisive close below the 0.024-0.023 BTC range could lead to further declines toward 0.020 BTC, a key support from the March 2020-May 2020 period.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

'The worst thing that happened to Ethereum' — Bitcoin up 160% since the Merge

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