• Steady decline of Ethereum was partly due to lowered transaction fees
• Other leading L2s saw rising transaction counts while ETH lost out slightly

Ethereum [ETH] has performed poorly since April, especially compared to Bitcoin [BTC]. As the leader of the altcoin market, some participants expect ETH to lead the altcoins’ bullish charge. As things stand, however, the altcoin is struggling to keep up with the market.

The ETH/BTC chart has been on a marked downtrend since April 2023. Until April 2024, the lows from June 2022 at 0.049 were defended, but the persistent downtrend of the past six months took ETH/BTC to lows not seen since April 2021.

Reasons for Ethereum losing value

Long-term Ethereum investors would be worried about Ethereum losing ground to Bitcoin at such a rapid rate. One of the reasons the token is losing out is the inflation present in the network since the Dencun upgrade in March 2024.

The Dencun upgrade introduced EIP 4844 which drastically reduced the transaction costs of L2 transactions. While it is good news for users, the falling network fees meant a lower amount of ETH was being burnt, making the token slightly inflationary in the past six months.

This was seen in the rising ETH supply chart.

Optimism activity trends firmly higher

Arbitrum [ARB] and Polygon Ecosystem Token [POL] saw a higher transaction count, but Optimism [OP] was the clear leader. This showed that the L2s were growing in popularity.

In particular, Optimism outperforming the rest can likely be attributed to the rise in Coinbase’s Base L2 on top of the Optimism Superchain.

Read Ethereum’s [ETH] Price Prediction 2024-25

An inflationary ETH and its performance against Bitcoin challenge the idea that Ethereum is money. An uptick in activity could alleviate this problem, but the lack of market conviction in ETH can be exemplified by the ETH/BTC chart.