Ethereum’s ‘Ultrasound Money’ Narrative Faces Scrutiny as ETH Sinks 65% Against BTC Since PoS Shift

Ethereum completed The Merge on September 15, 2022, shifting from proof-of-work to proof-of-stake. Together with EIP-1559’s burning of a portion of transaction fees, the change fueled expectations that ETH’s supply would steadily contract and inspired an “ultrasound money” narrative challenging Bitcoin’s status as a scarce asset.

Since the shift to PoS, ETH has plunged 65% against BTC, while its annual supply growth has turned positive from negative, ending its deflationary trajectory. Analysts said low fees on the Ethereum mainnet and the rapid migration of transactions to Layer 2 networks such as Arbitrum and Optimism have reduced the amount of ETH burned, calling the original investment narrative into question.