Bitcoin BTC +1.97% 's market dominance is approaching a multi-year high, rising to 51.2% on Tuesday and closing in on the two year high of 52% reached at the end of June, according to TradingView data.

The world's largest digital asset by market cap has outperformed ether and other major altcoins since the beginning of the year. Bitcoin changed hands for $27,354 at 2:28 p.m. ET, according to CoinGecko. The world's largest digital asset by market cap has traded flat over the past seven days, but is still up 66% this year compared with 32% for ether. The world's second-largest digital asset by market cap is priced at $1,561, down almost 6% in the past week.

Tepid response to ether futures ETFs 

"There are many reasons for the current altcoin/ether underperformance vis-à-vis bitcoin," Deutsche Digital Assets Head of Research André Dragosch told The Block. He said that a major catalyst for the underperformance of ether was the lukewarm reception from institutional investors toward last week's newly deployed Ethereum Futures ETFs in the U.S.

"In aggregate, Ethereum ETH +0.92% ETPs only attracted a meager plus $0.9 million in net inflows last week despite the debut of these new ETFs. In comparison, net inflows into Bitcoin ETPs amounted to plus $85.4 million last week," Dragosch added.

The analyst also attributed the underperformance of ether compared to bitcoin to a recent research paper suggesting that the Bitcoin blockchain could potentially handle the smart contract computations associated with the Ethereum network.

"The underperformance appears to be related to the fact that bitcoin developer Robin Linus published a research paper that suggests that 'any computable function can be verified on bitcoin'."

Dragosch added that this implies that essentially all altcoin utilities could be enabled on the bitcoin blockchain. This is a view that bitcoin pioneer Max Keiser concurred with.

"Ether offers nothing that can’t be done with bitcoin," Keiser told The Block.