Ethereum under pressure: what is preventing the growth of the second cryptocurrency?

Popular crypto trader and analyst Guy Turner has expressed concern about the situation around Ethereum, which continues to lose ground to Bitcoin in terms of growth. In a new video, he noted that unlike the first cryptocurrency to update all-time highs, ethereum has never been able to break even the $4,000 mark, remaining well below its record of $4,900 set in 2021.

‘Ethereum's dynamics look so weak that it has become a subject of ridicule in the crypto community. Against the backdrop of Bitcoin's strong growth, the ETH/BTC chart has been showing a steady decline since September 2022. At the moment, there are no signals for a trend reversal, which indicates serious problems for the second most capitalised cryptocurrency,’ Turner stressed.

The analyst sees several key factors hindering the development of Ethereum. First of all, it is increasing competition. And it is not only about external rivals, such as Solana, Binance Chain, Aptos and Avalanche, but also about internal players, whose projects within the Ethereum ecosystem fragment liquidity. In a highly competitive environment, capital is dispersed between different initiatives, weakening the position of the core network.

Additional pressure comes from the macroeconomic situation. High interest rates make traditional financial instruments more attractive. For example, US bond yields reach 4.28 per cent per annum, while ETH staking yields only about 3 per cent. This reduces the interest of institutional investors in investing in ether, which becomes less competitive compared to alternative assets.

Previously, Guy Turner expressed the opinion that the upcoming Ethereum update called Pectra could be a growth driver for the network. However, so far the market is showing scepticism towards such forecasts, and ether continues to remain in the shadow of the first cryptocurrency.