Ethereum: What Could Flip Its Underperformance?

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As the second-largest cryptocurrency gained less than 5% in 2019, Ethereum has been underperforming Bitcoin this year with BTC still maintaining its staggering 95% year-to-date gains despite previous selloffs. In light of Ethereum’s successful implementation of its latest network upgrades, dubbed Istanbul, and the rising popularity of decentralized finance, is playing catch-up with the price of ETH a viable strategy for investors? From a macro perspective, Ethereum’s approval among financial institutions has been rising noticeably. But what does that mean for general ETH investors?

ETH Underperforms

Bitcoin has always been the most widely quoted cryptocurrency in the world. It often acts as a benchmark of the broader crypto space, and its performance has been a significant market focus since the very first day. Indeed, the cryptocurrency markets look a lot different now than when Bitcoin made its debut. The rapid development of the crypto space has widened the spectrum, resulting in a rising appetite fors altcoin like ETH, XRP, and EOS. Despite the massive ETH rally in late 2017 to early 2018, the price of ETH has been significantly underperforming BTC this year.

Figure 1: Ethereum vs. Bitcoin YTD Performance

Source: Tradingview

While many factors may have attributed to ETH’s underperformance, a multi-layer analysis can provide us with a more comprehensive look at Ethereum and indicate whether its price has the potential to make a decisive turn in the long run.

Network Valuation

In the age of the internet, investors can sometimes find difficulties in evaluating companies in new economies as they try to use conventional valuation methods. FAANG stocks (Facebook, Amazon, Apple, Netflix, and Google) are a good example. Despite criticisms, the group of the most influential tech giants has been one of the critical drivers of the equity markets for quite some time.

Similar to FAANG stocks, many believe that

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