Ethereum ‘Ultrasound Money’ Pivot Doesn’t Help ETH Price Beat Bitcoin

Ether (ETH) has fallen roughly 65% ​​against Bitcoin (BTC) since Ethereum's 2022 transition to proof-of-stake (PoS), casting doubt on the network's “ultrasound money” thesis.

Main Receptors:

Ether Ultrasound's money narrative is disappointing.

The idea behind “ultrasound money” is that Ether will be cheaper than Bitcoin.

Supporters have argued that Ethereum's 2021 EIP-1559 update, which started burning some transaction fees, coupled with a steep decline after the 2022 merger will make Ethereum obsolete over time.

According to ultrasound.MONEY, since the release of the combustion method in 2021, the new annual supply of ETH has averaged -0.19%.

In the year Since Ethereum switched to PoS in 2022, however, the supply of ETH has grown by about 0.23% annually, although this is lower than Bitcoin's current annual inflation rate of 0.85%.

However, the growth in Ethereum supply since the merger undermines expectations of a price drop. ETH will only decline when there is enough mainnet activity to burn more coins to validators than the network issues.

That situation has weakened. Ethereum's average transaction fee was about $0.21 in March, down roughly 54% from a year ago, according to YCharts.

Lower fees mean the Ethereum network burns less ETH.

Moreover, most Ethereum activity has moved to cheaper layer-2 networks. L2beat shows coils handling 926 user operations per second (UOPS) on March 7, compared to just 22.36 on the Ethereum mainnet.

As the shift helps balance the network, it weakens the burn-in-hard conditions required for Ethereum rejection.

Why is ETH underperforming BTC?

Ether's price is underperforming BTC because investors believe in Bitcoin's steady supply, analyst Handre said.

Bitcoin's strictly enforced 21 million coin cap and fixed supply schedule appeals to investors because it makes BTC more predictable in the long run. This resistance to change makes Bitcoin stand out from the monetary policies of most altcoins.

“Every competitive argument, every reform proposal, every attempt to change Bitcoin's monetary policy has failed because the majority of the economy supports what they are protecting,” Handre said.

Related: Ether's Road to $2.5K May Be Harder Than Expected: Here's Why

Ethereum, on the other hand, is unpredictable when it comes to monetary policy, especially now that the supply of ETH is growing modestly again.

Handere added:

“Every altcoin promises scarcity but delivers inflation by design. Ethereum abandoned the narrative at an inconvenient moment as the “ultrasound currency.”

Investors' choice is reflected in the US ETF market. As of March, spot Bitcoin ETFs held more than $91.9 billion in assets under management, compared to $12.1 billion for spot Ethereum ETFs.

Ether did not provide a convincing hint against the dollar either.

In the year Between 2021 and 2026, ETH barely surpassed its previous all-time high of $4,800 before losing momentum, unlike Bitcoin, which doubled in price from its 2021 high to its 2025 high.

ETH's underperformance over the past five years shows that declining supply alone is not enough to generate sustained new demand.

The sentiment was also weighed down by the recent selloff of ETH linked to Vitalik Buterin and the Ethereum Foundation.

Public criticism from Culper Research, which says it is shorting Ether due to Buterin's selloff, has underscored the view among some traders that Ethereum's internals are channeling strength rather than reinforcing long-term guilt.