I just looked at a set of data, and it's quite interesting. Since Ethereum shifted to PoS in 2022, ETH has fallen about 65% relative to BTC, directly exposing the once-popular ultrasound money narrative.

Let's review the logic back then. The 2021 EIP-1559 upgrade introduced a burn mechanism, and after the 2022 Merge, the new ETH issuance dropped significantly. Supporters believed this would make ETH more scarce than BTC. Theoretically, it sounded good—ETH's annual supply rate averaged around -0.19% after the burn mechanism was activated. But in reality, after the Merge, ETH's supply has actually been increasing at an annualized rate of 0.23%. Although lower than BTC's 0.85% inflation rate, this breaks the promise of deflation.

Where's the problem? ETH can only truly become deflationary if on-chain activity is high enough and the burn volume exceeds issuance. But now, that condition is weakening. Ethereum's average gas fee has dropped from about $0.45 last year to roughly $0.21 now, a decline of over 50%. Lower fees mean less ETH is burned. More critically, Ethereum's activity has migrated heavily to Layer 2 networks, with about 926 UOPS per day on L2, compared to only 22.36 on the mainnet. This is good for scalability but undermines the premise of ultrasound money.

Why is ETH being crushed by BTC? A key reason is investor trust in a fixed supply. BTC's 21 million cap, combined with a completely fixed issuance schedule, makes investors feel it’s predictable and stable. This resilience is unique among crypto assets. As one analyst put it, "Bitcoin has failed every adjustment, upgrade proposal, or attempt to change monetary policy because the majority of the economy clearly knows what they’re protecting." In contrast, Ethereum's supply policy is less certain now.

This is also evident in the ETF market. As of April, spot Bitcoin ETFs manage over $92 billion, while Ethereum ETFs only about $12 billion. This gap says it all.

ETH's performance in USD also hasn't been impressive. From 2021 to now, ETH has only just surpassed its previous high of $4,800, and now hovers around $2.23k, without a real breakout. In comparison, BTC doubled from its 2021 high to reach new highs in 2025. Over five years, ETH's performance has been so mediocre that reducing issuance alone isn't enough; real demand is needed to support the price.

Another pressure comes from continuous selling by Vitalik and the Ethereum Foundation. Some research institutions openly express bearish views on ETH because of this, reinforcing a market perception: insiders are distributing at high levels rather than holding long-term. This sentiment damage may explain better than any technical factor why the ultrasound money narrative ultimately failed to save ETH's price performance.