Ethereum-to-Bitcoin Ratio Drops to 2020 Lows: Is It Time to Worry?

The crypto market is no stranger to ups and downs, but lately, Ethereum's performance relative to Bitcoin has caught attention. The reason for that is the fact that the Ethereum-to-Bitcoin (ETH/BTC) ratio has fallen to its lowest point since 2020. This has left investors wondering whether Ethereum is losing its edge or if it’s just a temporary setback.

Ethereum Struggles Against Bitcoin

Ethereum has long held the title of the second-largest cryptocurrency by market cap, but recently it’s been showing signs of strain. As of April 2025, the ETH/BTC ratio has dropped to 0.022, a significant decrease from its peak in 2022. To put it into perspective, Ethereum has shed over 70% of its value relative to Bitcoin since the ratio was around 0.085 in September 2022. As a result, Ethereum is now trading at about $1,880, down nearly 62% from its all-time high of $4,890 in 2021.

What’s behind this steep decline? Several factors contribute to Ethereum’s current woes. For one, Ethereum’s total value locked (TVL) in decentralized finance (DeFi) platforms has been shrinking. In early 2024, it held over 61% of the DeFi market, but by April 2025, that figure had fallen to just 52.5%. As competitors like Solana gain ground, Ethereum’s dominance in the smart contract space is slipping. The rise of alternatives is becoming more apparent as projects and users flock to newer, faster, and cheaper networks.

Competition With Other Altcoins

Ethereum's struggle isn't just about its internal technical issues; it’s also facing increased competition. Layer-1 blockchain alternatives like Solana, Binance Smart Chain, and Avalanche are attracting users with faster transaction speeds and lower fees. This has chipped away at Ethereum’s once-unassailable position in the smart contract space.

On top of that, Ethereum's core layer, despite various upgrades, is still processing only 10-16 transactions per second. Meanwhile, networks like Solana boast over 4,000 transactions per second. This makes Ethereum a slower, more expensive option for users, especially those dealing with smaller transactions or looking for fast-paced trading opportunities. For many users, this makes alternatives like Solana more appealing, leaving Ethereum’s ecosystem with a smaller share of the market.

A Bearish Outlook for Ethereum?

Naturally, the bearish trend for Ethereum is also a result of broader market conditions. While Bitcoin has held steady with just a 10% drop year-to-date, Ethereum has seen a drastic 46% decline over the same period. The sharp contrast is especially concerning for ETH investors.

One key issue for Ethereum is its increasing reliance on layer-2 rollups to scale its network. Rollups like Arbitrum, Optimism, and Base have gained traction, but this shift is causing activity to move away from Ethereum’s mainnet, pulling both users and transaction fees toward the layer-2 ecosystems. As one user pointed out, while rollups are thriving and collecting fees, Ethereum’s base layer is becoming less active, almost like a ghost town.

Ethereum’s market dominance has dropped to below 8.4%, its lowest level in over four years. This is a clear sign that investors are looking elsewhere. For many, the prospect of Ethereum reclaiming its former glory seems increasingly unlikely unless it can address its core limitations.

Conclusion

The question of whether it's time to panic is tough to answer. While Ethereum's performance raises concerns, especially when compared to Bitcoin’s relative stability, the network remains a major player. It’s still central to DeFi and NFTs, but unless Ethereum can significantly boost its scalability and usability, it might fall behind faster and cheaper competitors. On the other hand, Bitcoin continues to lead the market, with strong institutional investment making it less vulnerable to competition.

So, should Ethereum investors be worried? While the current market has its challenges, Ethereum is still a major player in crypto. As long as the network keeps evolving, it can stay relevant. However, it’s clear that Ethereum has strong competition and will need to solve some problems to regain its momentum.