I’ve noticed something that many in the market are ignoring: the ultrasound money narrative for Ethereum is practically dead, and the numbers confirm it in a rather brutal way.

Ether has lost about 65% of its value against Bitcoin since Ethereum switched to Proof-of-Stake in 2022. It may seem like a detail, but it’s the clearest signal that Ethereum’s deflationary promise hasn’t held up. While BTC has doubled from its 2021 peak to the highs of 2025, ETH has only brushed past its previous all-time high around $4,800 before losing momentum entirely.

It all started with an intriguing idea: with the 2021 EIP-1559 upgrade that began burning transaction fees, plus the drastic drop in new emissions after the Merge, Ethereum would have become even scarcer than Bitcoin. The ultrasound money thesis promised that ETH would become deflationary over time. Sounds great on paper, doesn’t it?

The problem is that reality took a different turn. After the Merge, the supply of ETH has actually started growing again at an annualized rate of about 0.23%, even though that’s still lower than Bitcoin’s annual inflation of around 0.85%. But here’s the critical point: for Ethereum to become truly deflationary, activity on the mainnet must burn more tokens than are issued to validators. And this condition has weakened considerably.

Ethereum’s average fees in March were about $0.21, a 54% drop compared with a year earlier. Lower fees mean less ETH being burned. And, most importantly, the majority of activity has shifted to cheaper layer 2s. Rollups were processing 926 user operations per second, while mainnet was only doing 22.36. That’s a huge imbalance. So yes, layer 2s help Ethereum scale, but they completely undermine the conditions needed for that deflation that was at the heart of the ultrasound money narrative.

So why does BTC keep flying while ETH stays behind? According to analysts, it’s a matter of confidence in the supply program. Bitcoin has a fixed cap of 21 million coins and an issuance schedule that doesn’t change. Investors know exactly what they’re protecting, and this predictability is powerful. Every attempt to change Bitcoin’s rules has failed because the economic majority knows what it’s defending.

Ethereum, on the other hand, doesn’t offer this kind of predictability. Monetary policy is constantly evolving, and now that ETH’s supply has started growing again, the ultrasound money narrative has become embarrassing for many supporters. It’s almost as if Ethereum abandoned this promise the moment it became inconvenient.

Market data tells the story even more clearly. Spot Bitcoin ETFs in the United States manage over $91.9 billion in assets, while spot Ethereum ETFs are stuck at around $12.1 billion. The difference is enormous. And if you look at current performance, ETH is at 2.31K while BTC is at 75.54K. Investor confidence is evident.

There’s also another issue that has affected sentiment: periodic sales of ETH associated with Vitalik Buterin and the Ethereum Foundation. Some traders have started to think that insiders are distributing during bullish phases rather than building long-term trust. This has reinforced the idea that the ultrasound money narrative is more of a marketing promise than a reality of design.

The lesson here is simple: promising scarcity isn’t enough if the project keeps changing its monetary rules. Bitcoin won this battle because it stayed faithful to its original promise. Ethereum, in a rather painful way, has learned that flexibility comes at a price.