Novaque Research
Why Ethereum Is Still Underperforming Bitcoin
Ethereum shows a widening gap between supply restraint and economic demand. The constructive side is clear. ETH exchange reserves have fallen from approximately 16.8 million to 15.1 million, while the staking rate has risen from below 30% to 33.9%. More ETH is entering staking while fewer units remain on centralised exchanges. This reduces immediately available supply, although staked ETH can still gain economic liquidity through liquid-staking tokens and derivatives. Demand indicators remain much weaker. Total fees burned ended near 11.9 ETH after several temporary activity spikes earlier in the year. Low burn implies that base-layer usage is not generating enough fee pressure to support a strong scarcity narrative. Citi previously identified weak user-activity metrics as a particular sensitivity for ETH, while noting that stablecoin and tokenisation growth could eventually improve demand. The Coinbase Premium Index remains negative near -0.106, showing weak US spot demand. Funding is still positive at approximately 0.0021 despite ETH trading near $1,800. Traders are therefore paying to maintain long exposure without confirmation from American spot markets or stronger network economics. Considering the economics of Ethereum, while it has absorbed supply, the market has not given it a bigger monetary premium. Therefore, key considerations should be given to persistent fee growth and settlement volume, and improvement in the Coinbase premium.