When #ETH starts underperforming #BTC in the long term, where exactly is the problem?

Over the past year, ETH has lagged behind BTC, and it’s almost unnecessary to argue.
ETFs, institutional allocations, macro hedging, dollar hedging—all the “understandable narratives”—are continuously converging towards BTC.
And ETH finds itself in an awkward position.
It remains the absolute foundation of DeFi, stablecoins, RWA, and on-chain finance,
but in terms of asset performance, it continues to lag behind.
The issue isn’t price,
but a more fundamental question:
Is ETH underperforming BTC because it’s being marginalized,
or is the market pricing it incorrectly using a flawed framework?
Messari’s latest annual report offers a blunt but critically important answer.
1. ETH underperforming BTC is not inherently abnormal
Let’s start with the conclusion:
From a structural perspective, ETH lagging behind BTC isn’t unusual.
BTC is an asset with an extremely “single narrative”:
Few variables, consensus centered, clear valuation logic.
As long as the market enters a period of macro uncertainty,
BTC naturally becomes a premium receiver.
In contrast, ETH is quite the opposite.
It plays three roles simultaneously:
Decentralized settlement layer
DeFi / stablecoin infrastructure
“Production network” with upgrade paths and execution risks
This means:
ETH’s price isn’t just about macro consensus,
but also about digesting technological rhythms, ecosystem changes, and value capture structures.
Messari’s words are straightforward:
ETH’s problem isn’t demand disappearing, but that its valuation logic has become more complex.
2. The real eye-opener isn’t price, but “usage ≠ returns”
The market’s real doubts about ETH aren’t because it’s slow to rise,
but because a fact is becoming increasingly clear:
Ethereum is being heavily used, but ETH itself isn’t benefiting proportionally.
Data is cold and precise:
By 2025, Ethereum’s share of L1 transaction fees
will decline to about 17%
ranking fourth among L1s
A year ago, it was still first
This isn’t user loss,
but a migration of the “value realization layer” of economic activity.
Trades, derivatives, high-frequency execution → taken over by Solana, Hyperliquid
Meanwhile, Ethereum increasingly carries:
Stablecoin settlement
RWA
Institutional capital pathways
The problem is:
These activities are happening more and more on L2 or application layers,
rather than directly reflected in ETH’s fee income.
In summary:
Ethereum is becoming more important,
but ETH is increasingly like diluted equity.
This isn’t a technical failure,
but an inevitable result of the Rollup route.
3. Multi-chain isn’t a threat; the real pressure comes from “execution layer being replaced”
Many attribute the problem to “multi-chain competition.”
Messari’s judgment is even harsher:
Multi-chain isn’t the threat to ETH,
but the ongoing replacement of the execution layer is.
What are Solana’s advantages?
High-frequency trading
Low latency
Active retail participation
But when institutions truly put money on-chain:
Stablecoin issuance
Tokenized T-bills
On-chain fund shares
Regulatory-compliant custody pathways
Ethereum remains the top choice.
This explains a seemingly contradictory phenomenon:
ETH performance is under pressure,
but Ethereum’s “institutional usability” has actually become stronger.
The issue is:
The market won’t automatically give you a premium just because “you’re important.”
When the execution layer makes money,
and the settlement layer emphasizes security and trustworthiness,
ETH’s valuation inevitably becomes more abstract.
4. ETH still relies on BTC as a “macro anchor”
A more realistic view:
ETH’s asset pricing is still deeply tied to BTC.
BTC’s narrative has been greatly simplified:
Digital gold
Macro hedge
Acceptable assets for ETFs / national balance sheets
As for ETH:
It’s a platform
It’s a settlement layer
It’s a technological system
Or a network still undergoing continuous upgrades
ETF capital flows say it all.
It’s not that institutions don’t want to buy ETH,
but they’re waiting—for narrative certainty.
Messari’s conclusion is very restrained:
ETH’s monetary premium
remains a secondary derivative of BTC’s monetary consensus.
BTC is the anchor,
ETH is a high-beta spillover.
5. So, is ETH “having problems”?
No.
Ethereum won’t be replaced,
it still remains the default foundation of on-chain finance.
The real question is only one:
Can ETH continue to benefit from Ethereum’s success?
This is a structural issue, not a technical one.
Ethereum is evolving into:
Increasing usage
Growing systemic importance
Rising dependence from institutions
But ETH’s value capture is increasingly reliant on:
Monetary premium
Security premium
Macro risk appetite spillover
Rather than direct cash flows.
Final conclusion:
ETH lagging behind BTC isn’t a failure,
but a result of role differentiation.
BTC: macro narrative, asset anchor
ETH: financial operating system, settlement base
The market is willing to pay a premium for the former,
but remains cautious about the latter.
Messari’s conclusion isn’t radical, but honest:
ETH’s monetary story has been repaired,
but it’s not yet complete.
It could explode when BTC is established,
but it hasn’t yet proven it can detach from BTC and be priced independently.
At least for now, it hasn’t.