EtherETHBitcoin) is down roughly 65%.BTCSince Ethereum’s 2022 move to Proof-of-Stake PoS, cast doubt on the network “ultrasound money” thesis.
The key takeaways:
The story of Ether’s ultrasonic money is disappointing
This is the idea behind “ultrasound money” Ether was expected to become more scarce than Bitcoin.
Ethereum advocates argued Ethereum’s 2020 EIP-1559 upgradeEther will become less inflating over time as a combination of the fact that ETH issuance has dropped sharply since the merger 2022.
According to Ultrasound.MONEY’s data, ETH’s new supply rate was -0.19% on average after the burn mechanism became active in 2021.
ETH’s supply, since the switch to PoS by Ethereum in 2022 has increased at a rate annualized of around 0.23%. However, this is still lower than Bitcoins’ current inflation rate (0.85%).
Ethereum’s growth of supply after the Merge has undermined the promise of deflation. ETH becomes deflationary when the mainnet burns more coins than it issues to validators.
The condition of the market has changed. Ethereum’s monthly average fee was $0.21, approximately 54% less than a month earlier. YCharts.
Ethereum burns less ETH with lower fees.
A large part of Ethereum activity is now concentrated on layer-2 networks, which are cheaper. L2beat reports that rollups handled 926 UOPS (user operations per second) on 7 March, compared with just 22.36 for Ethereum’s mainnet.
The shift in the algorithm helps Ethereum scale but weakens conditions that are required for deflation.
Why does ETH outperform BTC in terms of performance?
According to an analyst, Ether has been underperforming BTC in part because investors believe Bitcoin’s fixed-supply. Handre.
Investors like the fact that Bitcoin has a strict 21-million coin limit and a fixed supply. This makes BTC predictable over time. Bitcoin’s resistance to change sets it apart from most other altcoins.
“Every scaling debate, every upgrade proposal, every attempt to change Bitcoin’s monetary policy has failed because the economic majority understands what they’re protecting,” Handre said.
Related: Ether’s path to $2.5K may be trickier than expected: Here’s why
Ethereum’s monetary policy is unpredictable, especially since the ETH supply has grown modestly once again.
Handre added:
“Every altcoin promises scarcity but delivers inflation by design. Ethereum abandoned its ‘ultrasound money’ narrative the moment it became inconvenient.”
Investors’ preferences are evident in the ETF market of the United States. By March 2017, spot Bitcoin ETFs managed assets worth more than $91.9billion, as compared to about $12billion for spot Ethereum ETFs.
Ether also never managed to make a significant dollar-based breakthrough.
Unlike Bitcoin, ETH’s momentum waned between 2021-2026. It only slightly exceeded the previous high of $4,800. price doubled from the 2021 peak to the 2025 record high.
The lackluster performance of ETH in the past five year suggests that reduced issuance was not sufficient to generate sustained new demand.
Both the mood and sentiment have been affected by periodic ETH sales linked to Vitalik Buterin Ethereum is a foundation.
Culper Research is being criticized for its public statements. said Buterin selling Ether has led some traders to believe that Ethereum’s Insiders are strengthening rather than distributing.
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Source: cointelegraph.com
