eth/btc has scored its lowest points since 2020.

Can Ethereum still claim to control the L1 as Solana gets the ground and crashes with an ETH/BTC ratio below 0.022?

ETH/BTC hits multi-year lows

Ethereum (ETH), the world’s second largest market capitalization, faces a calm reality check. The Eth/BTC ratio is a metric used to measure the strength of Ethereum against Bitcoin (BTC), falling to 0.022, the lowest level since December 2020, indicating a sharp drop in Ethereum’s relative performance.

Since September 2022, when the ratio is around 0.085, Ethereum has flowed more than 73% of its value compared to Bitcoin. At the time of writing, ETH has fallen by around $1,880, or 9%, and 62%, down from its all-time high of $4,890 in November 2021.

It’s down just 10% since the start of the year, and the 46% Ethereum decline over four times deeper in the same time frame compared to Bitcoin trading at the $84,300 level.

The rate of decline reflects the slipperiness advantage of Ethereum in smart contracts and Layer 1 ecosystems.

As other L1s like Solana (Sol), Binance Chain (BNB), and Avalanche (Avax) gain the ground and Bitcoin reaffirms its advantage, Ethereum appears to be stomping on the water.

Let’s take a closer look at what drives this imbalance, whether Ethereum is truly losing ground, and what it means for the future of the L1 blockchain race.

Ethereum metrics show signs of softening

As of April 1, Ethereum’s total value lock was around $50.5 billion, accounting for 52.5% of the total market. This marked a significant decline from 61.64% in February 2024, indicating a gradual stock loss in decentralized financial markets.

Some of this shift can be traced back to the rise of competitors like Solana. Solana’s share rose to 2.84% to 7.24%, bringing its total TVL to $6.69 billion, an increase of more than 2.5 times in more than a year.

One new trend is the difference in user behavior across the network. Ethereum continues to attract users involved in passive debt activities, such as yield and staking.

In contrast, the Solana ecosystem attracts more speculative and active traders, particularly with Meme Tokens and the high frequency Defi, suggesting that while Ethereum’s existing use cases are robust, retail user activity may not match where it is currently prevalent.

Meanwhile, the high gas prices, historically one of Ethereum’s biggest barriers, have improved. The average gas price fell to 1.12 GWEI in March 2025, significantly lower than the levels seen in the past few years.

However, despite these improvements, Ethereum still remains slower to use compared to new chains, particularly to create smaller transactions.

Among these, Bitcoin ETFs have attracted more than $36 billion in net inflows so far, but Ethereum ETFs have struggled to attract attention. In March 2025 alone, net total flow to ETH ETFs fell 9.8% to $2.43 billion.

On the trading front, sentiment about Ethereum appears to be getting worse. According to Kobeissi’s letter, the short position at Ethereum skyrocketed 40% in early February, rising above 500% since November 2024, indicating an unprecedented level of bearish position.

Meanwhile, Ethereum’s overall market dominance is currently below the lowest level of 8.4% in four years or more. As pointed out by Milocredit, Crypto Mortgage Company, this suggests that capital is flowing to ETH and other options, including Bitcoin, Solana and the emerging tier 1 platform, which are leveraging the slow momentum of Ethereum.

Scalability tradeoffs are catching up

For years, Ethereum’s growth story has been on the promise of scaling. However, as of early 2025, that promise remains largely unfulfilled in the basic layer. Despite multiple protocol upgrades, Ethereum’s mainnet still processes just 10-62 transactions per second.

At the time of writing, its effective throughput whiver around 16 transactions per second. This is in stark contrast to Solana’s 4,322 TPS. This has become an important reason why new users and applications are choosing to build elsewhere.

The move to proofing via merge in 2022 has significantly improved Ethereum’s energy efficiency and reduced energy usage by over 99%. However, it rarely resolved the limitations on the core throughput of the network.

As a result, Ethereum is increasingly dependent on layer 2 rollups like Arbitrum (ARB), Optimism (OP), and Base, and is expanding its operations. These networks extend the functionality of Ethereum by processing transactions off-chaining and returning them to the mainnet.

Adoption of the L-2 reduced user costs, but also led to unintended consequences. Activities are shifting away from the mainnet of Ethereum, drawing both users and transaction fees towards the L-2 ecosystem.

As one user from X stated, “Arbitrum and optimism are rake up fees. The basic layer of Ethereum is turning into a ghost town.”

This trend is supported by data. Analysts like Geoff Kendrick of Standard Chartered claim that L2, particularly the bulk of L2s like Coinbase’s base, are sucking up billions of dollars in trading fees that otherwise pass through Ethereum’s mainnet.

Kendrick estimates that by diverting economic activity, the base alone has removed the value of around $50 billion from Ethereum’s market capitalization. This then reduces the amount of ETH burns through gas fees, weakening its deflation mechanism and the long-promoted narrative of ETH as “ultrasonic money.”

After EIP-1559, Ethereum’s fee-burning mechanism was expected to offset the issuance. However, as activity is now fragmented across dozens of roll-ups and sidechains, the overall fee burns have been significantly reduced.

ETH has once again become net inflation, but now it is at an annual rate of 0.5%. Meanwhile, staking yields are below 2.5%, and ETH is not attractive when compared to the Stablecoin strategy, which offers revenues of over 4.5% across the defi platform.

Even Pectra, an upcoming Ethereum upgrade, is designed to improve L2 efficiency by increasing the blob capacity from 3 to 6 for data availability.

Kendrick says he does not expect Pectra to reverse the wider ETH/BTC reduction, calling the upgrade insufficient to address Ethereum’s underlying structural issues.

At the same time, Ethereum’s mainnet activities seem to be dry. Bots, particularly those that deal with addiction bots, are currently dominating gas usage with top contracts. There are few organic applications that deploy directly to the mainnet.

As one user said, “The ETH mainnet is becoming a cemetery.” While this may be an exaggeration, Ethereum’s core layer has lost its reputation as a major destination for chain innovation.

Ethereum price forecast: What’s the bottom?

Although some signals from market analysts refer to a broad spectrum of possible outcomes, risk appears to pile up faster to ETH than potential tailwinds.

On the macro front, Ethereum is heavily linked to the broader risk asset environment. According to Bloomberg strategist Mike McGrone, “ETH is closely correlated with risk assets,” its performance is likely to reflect US stocks and high beta sector performance.

Ethereum could face intense downward pressure in 2025, especially if the stock market falls further, particularly under the weight of high interest rates, sustained inflation, or weakening global growth.

McGlone warned that in a worsening macro environment, ETH could “potentially reconsider the $1,000 level.” This is nearly 50% less than the current level.

From a technical standpoint, the price structure also shows signs of tension. Analyst Mags said Ethereum has “one of the worst charts of all time,” pointing to repeated failures over the $4,000 resistance zone during this cycle.

After three attempts, ETH not only failed to regain its highs, it also lost support at midrange levels, falling below the upward trendline held from the bottom of the previous market.

This type of breakdown, coupled with a lack of strong support below current levels, opens up the possibility of a retest near the $1,060 range, the last price seen in the 2022 bare market. As Mags stated, “Technically speaking, bearish scenarios seem more likely.”

But a more optimistic perspective came from trader Michael Van de Poppe.

He said that if ETH can cleanly break the $2,100 to $2,150 zone, it will move sharply to $2,800, indicating a new strength in the market.

He also highlights the recent US dollar index has declined as a favorable macro signal, suggesting that weak dollars could help support second quarter crypto rebounds.

Still, these bullish scenarios rely on Ethereum, which regains key technology levels and transforms broader market sentiment into a more advantageous position. Until then, the risks on the negative side have remained even more noticeable.

In the short term, Ethereum’s trajectory appears to be closely linked to the macroeconomic cycle and Bitcoin positioning. A critical move above $2,150 could mark the start of the recovery phase. Without it, however, technical and structural pressures could last.

Trade carefully and don’t invest more than you can afford to lose.