Given Ethereum's broader utility and tiny electricity consumption, one might expect it to outpace Bitcoin in value in the long run. However, the ETH/BTC ratio has dropped from 0.082 in August 2022 to 0.034 today. Why isn't Ethereum’s value keeping up with Bitcoin? What underlying factors might be driving this decline?
Eth supply is unknown, while BTC supply is capped at 21 Million. Having a capped supply is a core value in the Bitcoin story. In the ETH story, it is not. ETH supply is changing every couple of years in unpredictable ways.
2: Better decentralization
Proof of work means that every person/company/country can start acquiring Bitcoin without permission of the owners that already hold Bitcoin. As everyone can start mining Bitcoin. With proof of stake as it is used by Ethereum, a new investor needs to acquire ETH from the current holders.
POW also drives mining to many different places, as it goes to where there are still underutilized sources of power.
Sources: 1. https://github.com/bitcart/bitcart/issues/439 2. https://t.me/bitcart/20791
If you look back over the last decade, pretty much all uses that have been invented on top of blockchain technology have been overhyped in terms of actually widespread REAL world utility. Ideas like NFTs, DAOs, Smart Contracts, etc. are cool technological solutions to a number of problems, but they are not THE ONLY solutions to the problems that they solve. I.e. the problems they solve don't necessarily need a blockchain or real decentralization, and blockchains still make for a rather clunky and confusing user experience.
Contrast this with the solution of a truly decentralized way of electronically transferring funds instantly(ish) and without regards to intermediaries, laws, or borders. THIS solution exclusively solves a number of very real world problems that other solutions just can't (Traditional banks, CCs, PayPal, e-Gold, Liberty Reserve, etc.). Having a centralized system mediating financial transfers can create lots of problems in certain situations. (In other situations of course, centralized financial systems are nice).
In this regard: Bitcoin does a perfectly good job, is the most established, and has the most robust decentralization. It's fixed supply, whether or not overrated in actuality, certainly helps psychologically drive adoption, which creates a feedback loop (more adoption -> more trust). It's founding story also adds the the long-term trust as well. Being the first of its kind and totally out of left-field, there are none of these shenanigans with the currency being developed by VC-backed companies or founders pre-mining a ton that may be in conflict with the public interest.
While Bitcoin may not be "the best" or "sexiest" in certain technological factors (e.g. energy consumption, smart contract capabilities, etc.) compared to other blockchain technologies, it does a job and it does it well. I would be careful to not conflate how advanced a competing technology is with its actual value.