Ethereum Market Cap Plummets $1 Trillion Behind Bitcoin—3 Factors Driving ETH’s 2024 Decline

On Oct 22, 2024

Ethereum’s market cap has dropped $1 trillion behind Bitcoin due to declining whale transactions, ETH sales, and slow adoption of ETFs.
Concerns about centralization following Ethereum’s move to Proof-of-Stake are contributing to its ongoing market struggles.

Following the staking cap review recently shared by CNF, in which Vitalik Buterin warned about Ethereum’s centralization risks, the price of Ethereum (ETH) has not only struggled against Bitcoin (BTC) but also lost ground to other altcoins over the last three years.

Peak whale demand for ETH has dropped by nearly 70% since the 2021 bull cycle, significantly reducing the network’s liquidity and appeal to large investors. As shared via a recent official blog post, Vitalik Buterin highlighted:

This separation of powers helps keep validators decentralized, but it has one important cost: the actors that are doing the ‘specialized’ tasks can easily become very centralized.

Additionally, the Ethereum Foundation has sold off approximately 336,000 ETH (around $906.3 million) over the last four years, further contributing to the bearish sentiment surrounding the asset. Here are the 3 Factors Driving ETH’s 2024 Decline: 1) A 70% decline in Ethereum whale transactions over the last four years, 2) The sale of over $1 billion in ETH during market rallies, and 3) Adoption rates of 85% behind Bitcoin ETFs.

Ethereum Market Share Falls as Centralization Risks Grow

It is worth noting a recent CNF update on Ethereum developers when it was confirmed that the Altair upgrade would occur in late October. However, by October 2024, Ethereum’s market cap had fallen $1 trillion behind Bitcoin, a significant gap compared to the $625 billion difference during the 2021 bull cycle.

Ethereum’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) has raised concerns about centralization, as only large stakers can meet the 32 ETH minimum stake requirement.

This has led to the dominance of major validators, with two block builders, Beaverbuild and Titan Builder, validating 88.7% of blocks in October 2024. Buterin has introduced a new roadmap to mitigate these risks, aiming to address the growing centralization concerns as investors await further developments in 2025.

At the time of writing, according to CoinMarketCap, Ethereum (ETH) is trading at $2,635.43, with a decrease of 3.97% in the past day and an increase of 0.50% in the past week.