As a crypto investor with some experience under my belt, I’ve seen my fair share of market cycles and price movements. And based on the information presented in this article by Glassnode, it seems that Ether (ETH) has been underperforming compared to Bitcoin (BTC) over the last two years, resulting in a weaker ETH/BTC ratio.
As a crypto investor, I’ve noticed that Ethereum’s (ETH) price has been lagging behind Bitcoin’s impressive gains as we approach 2024. However, according to the insights from Glassnode analysts, there might be reasons for optimism on the ETH front.
A “weaker capital rotation” is behind Ether’s price underperformance
As a researcher examining the cryptocurrency market trends, I’ve discovered that Ethereum has been lagging behind Bitcoin in terms of price performance over the past two years. This underperformance is reflected in the ETH/BTC ratio, which hit an all-time low of $0.04622 on May 1, marking the weakest position for Ethereum relative to Bitcoin since April 2021.
According to Glassnode, Ethereum’s lackluster performance compared to Bitcoin during this market cycle can be attributed to a noticeable delay in the surge of speculative interest from large-scale investors, often referred to as the “STH cohort.”
The report identifies Short-Term Holders as individuals who have purchased crypt coins within the previous 155 days, frequently representing newly emerged investors’ demand in the market.
Glassnode analysts pointed out that Bitcoin saw a significant surge in hoarding behavior among large investors (STHs) prior to reaching new record highs in March. In contrast, Ethereum has yet to surpass its past peak prices.
As an analyst examining the on-chain data, I’ve noticed that Bitcoin’s STH-Realized Cap is almost at par with its peak during the last bull run. In contrast, Ethereum’s STH-Realized Cap is significantly lower than previous cycle highs, indicating a relatively subdued entry of fresh capital into the network.
“In many ways, this lack of new capital inflows is a reflection of the under-performance of ETH relative to BTC.”
The market is in the “early stages of a macro uptrend”
Over the years, Ether’s price trends have mirrored Bitcoin’s fluctuations, as demonstrated by its recent price behavior.
After its fourth halving, Bitcoin underwent a significant sell-off, causing the price to plummet by 11% down to a two-month low of $56,500 on May 1. However, since then, Bitcoin’s price has rebounded and stabilized between $62,700 and $65,550 for the past two days.
As a researcher, I’ve observed that Ether underwent a comparable correction following its halving event, resulting in a significant 6% decline. This unfortunate occurrence marked the poorest post-halving performance for Ether as reported by Glassnode.
From its peak of $73,835, Bitcoin’s price experienced a correction of approximately 20.3%. This marks the most significant decline on a closing basis since November 2022’s FTX lows.
“That said, this macro uptrend still appears to be one of the more resilient in history, with comparatively shallow corrections thus far.”
According to the analysis conducted by the on-chain data firm using the Net Unrealized Profit/Loss (NUPL) metric, both Ether and Bitcoin have relatively low Realized Capital gains associated with Long-Term Holders (LTHs). This finding implies that we are in the initial stages of a broader market uptrend for these cryptocurrencies.
Previously, according to Glassnode’s analysis, more funds have flowed into Bitcoin than Ethereum when significant market uptrends occur. For instance, during the 2021 bull run, the maximum capital injection into Bitcoin happened about 20 days before the same occurred in Ethereum.
Based on an analysis by Glassnode using a 30-day change in the Realized Capitalization (Realized Cap) for Ethereum (ETH) and Bitcoin (BTC), it has been observed that ETH’s Realized Cap has not yet gained significant momentum in this market cycle.
“For both assets, the Short-Term Holder variant peaked before the 2021 cycle top. This year, the BTC short-term holder Realized Cap has peaked around the new all-time high, while the ETH metric has hardly moved higher.”
As a data analyst at Glassnode, I have observed that the market behavior following Ethereum‘s halving event has shown striking similarities to past cycles. However, certain key indicators suggest that Ether’s performance in relation to Bitcoin has been weaker than in previous market cycles.
“When we break down capital flows and rotation between BTC and ETH, we can see that Bitcoin has received the lion’s share of inflows, likely driven in part by the US spot ETFs. Short-term holders and speculation activity appear concentrated within Bitcoin, with a remarkably weak spill-over into Ethereum thus far.”
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2024-05-07 23:46