The recent market cycle has seen Bitcoin's price surge dramatically, while Ethereum and several other established "value projects" have appeared comparatively sluggish. The ETH/BTC ratio has touched new lows, becoming a significant point of frustration for many seasoned crypto enthusiasts. Having weathered multiple bull and bear markets, holders remain perplexed by Ethereum's persistent underperformance, and community dissatisfaction seems to have reached a peak.
Has Ethereum's Original Vision Changed?
Although Ethereum and Bitcoin follow different paths without direct competition, most long-term ETH holders since the last bear market hoped ETH would outperform BTC, yielding a favorable ETH/BTC return. Historically, prior to this cycle, Ethereum often managed to outperform Bitcoin.
Similar to this investor mindset, Ethereum's original vision and differentiation strategy was to pursue paths untaken or deemed unfeasible by the Bitcoin community: building a smart contract application platform on the blockchain, exploring scaling solutions for better throughput and performance, and developing decentralized applications beyond digital gold.
Like other early "altcoin" projects, Ethereum aimed to improve upon Bitcoin, with a differentiation strategy intended to make it a more successful version.
If early crypto users were paying attention, they likely recall the once-ambitious Ethereum Foundation website background image. It clearly displayed a slogan: "Blockchain App Platform," which was the community's precise positioning for Ethereum at the time. The background image depicted a skyscraper under construction, symbolizing the expansion and development of the blockchain.
Now, some believe Ethereum's core vision has changed, particularly since the network's transition to Proof-of-Stake (POS). Due to its stagnant price, critics often blame the shift to POS for Ethereum's woes, considering the move from POW to POS a grave mistake. However, the transition to POS was part of the original roadmap—not a later alteration—and was a deliberate choice based on the needs of scaling a smart contract platform with an account-based model.
Recently, Bitcoin maximalists on social media shared a chart showing Ethereum's inflation rate rising rapidly post-merge, attempting to illustrate the flaws in Ethereum's new consensus mechanism. However, Ethereum community members quickly countered by sharing the complete chart, which included a comparison with Bitcoin's annual inflation rate (the proportion of new coins issued relative to circulating supply). The full picture made the situation much clearer.
Many initially criticized Ethereum for its unlimited supply, fearing endless inflation. The reality is that through the POS merge and EIP-1559, Ethereum has not only maintained security but also controlled inflation effectively—now notably lower than Bitcoin's current inflation rate and significantly better than other well-known POS chains.
Ethereum has firmly secured its position as the second-largest cryptocurrency and has become the benchmark against which new Layer-1 projects measure themselves, with many aiming to become a "better Ethereum." It's fair to say that aside from adjustments in implementation details, Ethereum's fundamental direction has remained consistent, and its original goals have largely been achieved.
Vitalik Buterin recently responded to criticism about the Ethereum Foundation's spending, highlighting nine key aspects of ETH's fundamental strengths:
- Ethereum no longer leaks 5 million ETH annually to Proof-of-Work (POW).
- Users enjoy low transaction fees.
- Transactions are confirmed in under 30 seconds instead of 10-30 minutes (thanks to EIP-1559).
- Zero-knowledge technology enables privacy while using ETH.
- Account abstraction allows average users to interact safely without seed phrases or centralized points of failure like those seen with SBF.
- Local ETH communities are thriving worldwide, often operating independently of the Foundation.
- ETH hasn't experienced downtime from DoS attacks or consensus failures since 2016.
- Numerous security initiatives (both internal and grant-funded) have prevented substantial fund losses.
- Critical libraries used across wallets and DeFi apps are supported.
From another perspective, Ethereum exists and commands a market cap of over $300 billion not solely because of its gas fee capture, but more due to its role in expanding and innovating within the crypto space, thereby capturing value overflow from Bitcoin. This underlying logic was a key reason ETH/BTC performed strongly in the previous two bull markets (2017-2018 and 2020-2021).
In the current cycle, despite Ethereum's solid fundamentals, many only emphasize issues like fragmented on-chain liquidity and competition from new Layer-1 blockchains, while overlooking a critical factor: the Ethereum ecosystem's role in capturing Bitcoin's value overflow.
Are Bitcoin's Unsolved Challenges an Opportunity for Ethereum?
In terms of design, Bitcoin is undoubtedly a masterpiece. However, no system is perfect. Projects that try to be everything at once often end up overly complex and vulnerable, struggling to gain traction.
Satoshi Nakamoto left certain challenges for future generations to solve. One significant issue is the contradiction between Bitcoin's diminishing issuance and the need for ecosystem growth, which threatens the network's long-term sustainability.
Simply put, as Bitcoin's issuance decreases toward its hard cap, lower inflation may drive scarcity and price appreciation, but this isn't necessarily beneficial for the network itself. Reduced block rewards inevitably mean lower miner revenue, potentially decreasing miner participation and, consequently, network security and stability.
The Bitcoin community has proposed a solution: foster a richer Bitcoin ecosystem. If future halvings lead to insufficient miner rewards, a thriving ecosystem could supplement miner income and ensure strong network security. This approach takes a page from Ethereum's scaling playbook. However, high costs, expensive transactions, and mainnet inefficiency pose serious challenges to Bitcoin's ecosystem development.
Bitcoin's problems remain on the table, and currently, the only apparent solution is perpetual price increase—an unlikely scenario. As capital pushes Bitcoin near its capacity, value will inevitably overflow to other blockchains. For now, Ethereum remains the only large-cap project capable of absorbing most of Bitcoin's value overflow.
Bitcoin L2 and Ethereum L2 Are in the Same Boat
The Bitcoin ecosystem is currently experiencing rapid growth, with many teams introducing scaling solutions, particularly Layer-2s inspired by Ethereum's advancements. It's fair to say that Ethereum's Layer-2 exploration has paved the way for Bitcoin's Layer-2 solutions. Bitcoin L2 and Ethereum L2 are converging toward similar goals. Some even joke that Ethereum is Bitcoin's largest testnet.
Of course, Bitcoin Layer-2s face hurdles, such as the difficulty of inheriting Bitcoin's native security and the impact of Bitcoin's slow block time on L2 transaction finality. Therefore, when idle BTC seeks to participate in DeFi, it often bridges to Ethereum for greater reliability and safety.
According to data from CryptoFlows, approximately $3.8 billion in assets (primarily via stablecoin bridges) have moved from Bitcoin to Ethereum—and this figure doesn't even include Layer-2 activity. The Ethereum mainnet receives the vast majority of cross-chain outflows from Bitcoin, demonstrating strong on-chain capital confidence in Ethereum. As BitcoinFi development continues, the Ethereum ecosystem is poised to capture an even larger share of these inflows.
From a broader perspective, in the age of multi-chain interoperability and chain abstraction aimed at mass Web3 adoption, couldn't Ethereum be seen as evolving into Bitcoin's largest sidechain or a广义 Layer-2? The best DeFi protocols on Ethereum are actively helping to mobilize dormant Bitcoin capital.
Whether through shared scaling solutions or cross-chain capital flows, Bitcoin and Ethereum's futures appear increasingly interconnected.
👉 Explore advanced on-chain analytics
Frequently Asked Questions
What does the ETH/BTC ratio represent?
The ETH/BTC ratio measures the price of Ethereum relative to Bitcoin. A declining ratio means ETH is underperforming BTC, which often signals market sentiment toward each asset's perceived value and utility within the crypto ecosystem.
Why did Ethereum transition to Proof-of-Stake?
The shift to Proof-of-Stake was always part of Ethereum's long-term roadmap. It was designed to drastically reduce the network's energy consumption, improve scalability, and introduce a more sustainable economic model for securing the blockchain through staking rather than mining.
How does Ethereum capture value from Bitcoin?
When Bitcoin's price appreciation or network congestion creates limitations, value and user activity often overflow to other ecosystems. Ethereum, with its robust DeFi ecosystem and smart contract capabilities, is a primary destination for this capital, especially for users seeking yield or more complex financial applications.
What are the main challenges for Bitcoin Layer-2 solutions?
Key challenges include achieving strong security guarantees that are rooted in Bitcoin's base layer, overcoming the slow transaction finality of Bitcoin's mainnet, and ensuring these solutions are trustless and decentralized enough to appeal to the core Bitcoin community.
Is the competition between Bitcoin and Ethereum a zero-sum game?
Not necessarily. While there is competition for market share and developer mindshare, both networks serve different primary functions and can coexist. Their ecosystems are increasingly intertwined, with innovations on one often benefiting the other through inspiration and cross-chain interoperability.
Will Ethereum's price ever outperform Bitcoin's again?
Historical cycles show that ETH has outperformed BTC in previous bull markets. Whether it happens again depends on numerous factors, including the successful rollout of Ethereum's scaling upgrades, broader adoption of its ecosystem, and its ability to continue capturing value overflow from Bitcoin and beyond.
Conclusion
From a current standpoint, Ethereum's original vision remains unchanged, and most of its initial goals have been realized. What has changed is that impatient holders, tempted by quicker gains elsewhere, have grown frustrated. In a broader context of liquidity scarcity, the contraction of crypto narratives and the rush toward meme coins is understandable. However, the upcoming global cycle of interest rate cuts, which will gradually release liquidity, could shift this dynamic. We must not forget that the value of crypto asset adoption and real-world Web3 applications will ultimately return to the forefront.
As the first and second-largest crypto assets, Bitcoin and Ethereum are not enemies; their relationship isn't black and white. Regardless of which camp one supports, the crypto community should move beyond infighting and counterproductive criticism. The right path forward is to collaborate toward the common goal of achieving mass adoption and building the next generation of the internet. Hopefully, Ethereum won't disappoint in the chapters to come.