[DigitalToday reporter Jinju Hong] Ethereum (ETH) has seen its value fall sharply against bitcoin (BTC) since switching to proof of stake (PoS) in 2022.

Cointelegraph reported on March 10 that Ethereum’s price has fallen about 65 percent against bitcoin. It has lagged bitcoin by a wide margin since The Merge, when Ethereum switched its consensus mechanism from proof of work (PoW) to PoS in 2022.

The trend is also raising questions about the “ultrasound money” hypothesis presented by the Ethereum community. The idea stems from expectations that a shrinking Ethereum supply would, over the long term, make it a scarcer asset than bitcoin.

Ethereum introduced a structure under EIP-1559, adopted in 2021, that burns part of transaction fees. Expectations grew that supply reductions would strengthen after the 2022 Merge update shifted the consensus mechanism to PoS.

But the actual results differed. Ultrasound.Money data shows Ethereum supply fell by about 0.19 percent a year after the burn mechanism was introduced, but turned to annual growth of about 0.23 percent after 2022. That is lower than bitcoin’s annual inflation rate of about 0.85 percent, but it is seen as far from the sustained deflationary structure the market expected.

Ethereum’s average network transaction fee recently stood at about $0.21, down about 54 percent from a year earlier. Lower fees reduced the amount of Ethereum being burned, weakening the deflation effect. A shift of much transaction activity to lower-cost layer2 networks is also seen as weakening burn conditions on the main chain.

Market analyst Handre (핸드레) said investors trust bitcoin more because it has a fixed supply and a predictable issuance structure. “On Ethereum, debates over scaling, upgrade proposals and attempts to change monetary policy repeat, but fundamental change is difficult because economic interests end up colliding,” he said.

Investor preference also showed a clear gap in the ETF market. As of March, spot bitcoin ETFs managed about $91.9 billion in assets, compared with about $12.1 billion for spot Ethereum ETFs.

The gap is also evident in price moves. Ethereum hit a high of about $4,800 since 2021, while over the same period bitcoin rose more than two-fold from its 2021 peak to its 2025 high.

The market also sees selling by Ethereum insiders as a factor weighing on investor sentiment. Critics said investor trust was shaken after controversy over some selling by Ethereum co-founder Vitalik Buterin and the Ethereum Foundation (FE). Research firm Culper Research also took a short position in Ethereum based on such selling.

Some traders said such moves could be seen as a strategy focused on defending the price rather than strengthening long-term value.

The market is also analysing that Ethereum needs a clearer investment story on supply structure, network demand and the layer2 expansion structure to maintain competitiveness over the long term.