When Bitcoin breaks its historical high under the push of US ETF, Ethereum appears to be struggling.
We all know that there was an unwritten rule in the market before: the ETH/BTC exchange rate would generally be maintained around 0.05, and if it exceeds this, BTC might rise or ETH might fall, and vice versa. However, this situation has changed since last year, with Bitcoin continuously hitting new highs and reaching 110,000, while Ethereum's weak performance is not worth mentioning. Now, the exchange rate has basically dropped from 0.05 to around 0.02.
Meanwhile, what is Ethereum's founder Vitalik doing in such a dismal ETH situation? He's making a robot meow, causing dissatisfaction across the entire network.
But rationally analyzing, Vitalik's behavior actually has no direct relation to the network's response. If ETH performs well, people would only say he's cute. Plainly speaking, it's just because ETH has fallen so miserably that people's emotions need a venting window.
Our in-depth analysis of why ETH is defeated by BTC reveals the most fundamental survival law of the cryptocurrency market: the selling pressure of early profit-taking is the ultimate variable determining the long-term trend of assets.
Comparison of early Bitcoin and Ethereum profiteers
If Bitcoin and Ethereum are compared to two gold mines, Bitcoin's miners have long disappeared into the historical river with the first batch of gold, while Ethereum's mine shaft still echoes with the clanging of pickaxes. Bitcoin's "magical aspect" is that it completed the most thorough "de-profiteering" in human financial history - Satoshi Nakamoto's 1.1 million BTC have remained dormant for 14 years, and the 3 million BTC mined by early Chinese miners have mostly flowed into the hands of long-term holders in Europe and the United States after multiple policy reshuffles.
More critically, at least 4 million BTC have permanently exited circulation due to private key loss or hardware damage. This means that 14%-19% of Bitcoin's total supply has completely evaporated from the market, with the actual selling pressure far lower than the paper data. This self-purification ability has gradually transformed Bitcoin into a true "digital gold" - without a founding team, without pre-mining, without interest groups, only supported by global consensus.
In contrast, Ethereum was born with a heavy historical burden. When the mainnet went online in 2015, 72 million ETH were allocated to the foundation and early investors, with these tokens costing almost nothing. Even today, 1.6 million "genesis ETH" still lie in the original address, like a Damocles sword hanging overhead. When ETH's price rises to a height that satisfies them, these zero-cost chips could potentially transform into nuclear-level selling pressure.
More troublingly, Ethereum has experienced two massive wealth-creation movements: during the 2016 ICO frenzy, project parties obtained ETH at almost zero cost, with peak monthly selling volume exceeding 500,000; the 2021 DeFi Summer created new vested interest groups, with Uniswap airdrop recipients once selling ETH worth $300 million in a single day.
After Ethereum's transition to PoS mechanism, the problem not only did not alleviate but also planted new hidden dangers. The PoS mechanism determines that Ethereum verification nodes do not need any hardware investment, just by placing their held ETH into the network, they can continuously produce new ETH as revenue. Approximately 1,800 ETH are produced daily (annual inflation rate of 0.3%), and these almost zero-cost "new chips" continuously enter the market, forming a double selling pressure with early profit-taking.
In comparison, Bitcoin PoW miners need to pay high electricity costs, forcing them to continuously sell BTC to cover operating expenses, thereby achieving continuous clearing of profit-taking. This difference is particularly evident in bear markets - when the market falls into liquidity drought, zero-cost token holders often choose to "lie flat", while miner selling pressure accelerates market bottoming.
Historical cases have confirmed the cruelty of this rule. Dogecoin and Litecoin, these two "three-no products" (no technology, no ecology, no application), can long-term stably rank in the top 20 market cap, precisely because their early profit-taking has been fully transferred. Dogecoin founder Billy Markus cleared out early in 2015, and the top ten Litecoin addresses only occupy 4% of circulation, with highly dispersed token holding.
In contrast, EOS, despite once claiming to be an "Ethereum killer", has Block.one team holding 100 million tokens, with continuous node selling causing its market value to drop out of the top 50. BCH, although copying Bitcoin's "dead coin" characteristics, has been unable to escape the shadow of selling pressure due to internal conflicts of interest between development teams and miners.
For investors, this game reveals two iron laws: first, any asset's price is ultimately determined by the supply and demand of circulating supply, not total market value; second, the ultimate test of token economics is the thoroughness of "de-profiteering". Currently hyped new public chains like Solana also face challenges - their early VC and team tokens will be gradually unlocked in the next 2-3 years, and only when these chips are fully transferred can they potentially truly challenge Ethereum's position.
The most profound lesson in the crypto market is: technology can be iterated, ecology can be rebuilt, but human nature's impulse for profit-taking can never be eliminated. Bitcoin took 14 years to complete the most spectacular "asset purification" in human history, and Ethereum is experiencing the same nirvana. The current ETH/BTC exchange rate has dropped to 0.02, and I estimate this number will go lower. However, some see despair, some see opportunity - perhaps only when the last early profiteer leaves the table will the true value game begin.
(Risk warning: The tokens mentioned in the text have extremely high volatility, please do not follow blindly)
