Ethereum as Money – Here's Why the Market Still Doesn't Support the Idea

• Ethereum's steady decline was partly due to lower transaction fees
• Other leading L2s saw increasing transaction numbers while ETH lost little

Ethereum [ETH] Has performed poorly since April, especially compared to Bitcoin [BTC]. As the altcoin market leader, some participants expect ETH to lead the altcoins' bullish charge. However, as things stand, altcoins are struggling to keep up with the market.

Source: ETH/BTC on TradingView

The ETH/BTC chart has been in a marked downtrend since April 2023. As of April 2024, the downtrend from June 2022 to 0.049 was protected, but the continuous downtrend of the last six months ETH/BTC has not seen since April 2021.

Reasons for Ethereum to lose value

Long-term Ethereum investors will be worried about Ethereum losing to Bitcoin at such a rapid rate. One of the reasons why the token is lost is the inflation that has existed in the network since the Denkun upgrade in March 2024.

Source: YCharts

Denkun introduced the upgraded EIP 4844 which greatly reduced the transaction cost of L2 transactions. While this is good news for users, the reduction in network fees means less ETH is being burned, making the token somewhat inflationary over the past six months.

This is seen in the increasing ETH supply chart.

Optimism activity trends are strongly high

Source: Sandhi

the decision [ARB] and the Polygon Ecosystem Token [POL] Saw a high transaction count, but optimism [OP] He was a clear leader. This shows that L2s are increasing in popularity.

In particular, the growth of Coinbase's base L2 on the Optimism superchain can be attributed to Optimism being ahead of the rest.

Read about Ethereum [ETH] Price Forecast 2024-25

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