Why Ethereum is lagging behind Bitcoin – Analysts cite inflation problems, Dencun upgrade and salt coins meme
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Ethereum (Crypto: Eth), the second largest currency crypto by market capitalization, outlined the diametrically opposite trajectory compared to the older brothers, Bitcoin (Crypto: Btc), last year.
Consider this. Bitcoin jumped 32% of the year, reaching a maximum of $ 109,000. Its share of the entire cryptocurrency market has spread from 52% to 60%.
Ethereum, on the other hand, infected 39%over the same time, reducing its market share from 16%to 8%.
The widespread gap sparked discussions about the role of Ethereum in the Crypto currency hierarchy and spoke with his future benzing course with a few analysts to understand the factors that contribute to the constant fall of ecosystems.
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Jeffrey Hu, Digital Asset Manager Investment Research Manager Hashkey capitalHe believed that the guilt was in the Ethereum economic model.
“The activation of the EIP-1559 enables the burning of multiple ether to deflation when the ether activity is high on Ethereum; however, to support the support of the chain application, Ethereum of the sea,” said HU.
Hard fork Ethereum London, called EIP-1559introduced a mechanism mechanism for the network token. According to this mechanism, the basic fee, ie the minimum transaction fee, is removed to add the ETH -UI deflection pressure to increase its value.
So, what exactly is the problem?
Hu claimed that the increase in blockchain layer-2 and Dencun upgradeWhich size commands reduced the fees to L2, they diverted the activity in the chain of the Ethereum basement, resulting in inflation.
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According to ultrasound money, the ETH deflation rate began to slow down in May 2024, and since the beginning of February, the supply of coin has been growing.
Source: ultrasound money
Trever CooverkoWeb3 investor and co -founder Sapien, That observation echoed.
“Ethereum is struggling to establish a narrative about how L2 akrets are and are not extraordinary in the main chain,” he added.
However, L2 is not the only competition that Ethereum encountered.
