Ether (ETH) is down approximately 65% ​​against Bitcoin (BTC) since Ethereum transitioned to Proof-of-Stake (PoS) in 2022, casting doubt on the network’s “ultrasonic money” thesis.

Key conclusions: :

Ether’s ultrasonic money narrative is disappointing

The idea behind “ultrasonic money” was that Ether would become even rarer than Bitcoin.

Supporters argued that Ethereum’s EIP-1559 update in 2021, which began burning through some transaction fees, combined with a piercing drop in novel ETH issuance after the 2022 merger, would lead to Ethereum deflation over time.

According to the novel ETH annual supply rate, after the start of the combustion mechanism in 2021, the average annual ETH supply rate was approximately -0.19%. Ultrasound. MONEY.

However, since Ethereum’s transition to PoS in 2022, the ETH supply has increased at an annual rate of approximately 0.23%, although lower than Bitcoin’s current annual inflation rate of 0.85%.

However, the enhance in Ethereum supply since the merger undermines the promises of deflation. ETH only becomes deflationary when there is enough mainnet activity to burn more coins than the network is issuing to validators.

This condition has weakened. According to Ethereum data, the average transaction fee in March was about $0.21, down about 54% from the previous year. YCharts.

Lower fees mean the Ethereum network burns less ETH.

Moreover, most of Ethereum’s activity has moved to cheaper Layer 2 networks. L2beat can be seen bulkpacks supporting 926 user operations per second (UOPS) on March 7 compared to just 22.36 on the Ethereum mainnet.

While this change helps scale the network, it weakens the high burn conditions required for Ethereum deflation.

Why is ETH performing worse than BTC?

According to the analyst, the price of ether has underperformed BTC, partly because investors trust the constant supply of Bitcoin To hear.

Bitcoin’s strictly enforced 21 million coin limit and fixed delivery schedule appeal to investors because it makes BTC more predictable in the long term. This resistance to change makes Bitcoin stand out from the monetary policies of most altcoins.

“Every scaling debate, every upgrade proposal, every attempt to change Bitcoin’s monetary policy has failed because the economic majority understands what it is protecting,” Handre said.

Related: Ether’s path to 2.5 thousand dollars may be more tough than expected: here’s why

Ethereum, on the other hand, is not as predictable when it comes to monetary policy, especially now that the ETH supply is growing modestly again.

Handre added:

“Every altcoin promises scarcity, but by design delivers inflation. Ethereum abandoned the ‘ultrasonic money’ narrative the moment it became inconvenient.”

Investor preferences are perceptible in the US ETF market. As of March, Bitcoin spot ETFs had more than $91.9 billion in assets under management, compared with about $12.1 billion for Ethereum spot ETFs.

Ether has also never provided a convincing breakout in dollar terms.

From 2021 to 2026, ETH only slightly exceeded its previous all-time high near $4,800 before losing momentum, unlike Bitcoin, which doubled in price from its 2021 peak to its 2025 all-time high.

ETH’s disappointing performance over the past five years suggests that emissions reductions alone have not been enough to create lasting novel demand.

The periodic sale of ETH linked to Vitalik Buterin and the Ethereum Foundation also influences sentiment.

Public criticism from Culper Research, which he said Ethereum was tiny due to Buterin’s selling, reinforcing some traders’ view that Ethereum insiders are spreading strength rather than reinforcing long-term belief.