Ethereum's Ether Underperforms Bitcoin, Putting New Investors at Risk: Glassnode Report
Summary:
Ethereum's Ether (ETH) has underperformed in comparison to Bitcoin (BTC), putting new investors at risk of losses, according to Glassnode's recent report. The analytics firm suggests that even with decreasing ETH price drawdowns, short-term investors stand to lose as their purchase price is close to the current trading price. Ethereum's underperformance over the last two years and a weaker ETH/BTC ratio also raised concern. Glassnode notes the market is anticipating direction from US regulators on spot Ether ETFs, while long-term Ether holders continue to withhold sales despite profitable returns.
Ether (ETH), Ethereum's cryptocurrency, has performed less impressively in comparison to Bitcoin (BTC) in this business cycle, and new investors are at risk of incurring losses. According to a recent issue of Glassnode's weekly "The Week On-Chain" report, speculators have played a crucial role in supporting ETH's value.
Ethereum speculators are potentially on the brink of panic after both Bitcoin and Ether saw a reduction in their prices, subsequent to Bitcoin's recent block subsidy halving in April. For supporters of Ethereum, the recent weeks have been tough, especially as BTC/USD experienced one of its greatest downturns since the late 2022 mishap involving FTX.
Glassnode pointed out, "Similar to Bitcoin, Ethereum too has seen a notable downturn, albeit its corrections have been significantly less steep since the FTX crash, indicating some sort of resistance during pullbacks and a general reduction in volatility in the digital asset space." The company also highlighted that Ethereum's steepest cycle drawdown was -44%, more than twice Bitcoin's -21% decline. This underscores Ethereum's relative underperformance over the past two years, which is contributing to a weaker ETH/BTC ratio.
Although the scale of ETH's price drawdowns is decreasing, some investor groups are now facing a potential state where their investments could result in losses. Ethereum's short-term holders (entities holding coins for 155 days or less) potentially stand to lose, as their average purchase price is right around $3,000 which is near the current trading price.
With reference to Ethereum's market value to realized value (MVRV) metric, which measures unrealized gains or losses, Glassnode indicated that a further market dip could cause a sense of panic among the short-term holders, potentially leading to volatile price fluctuations.
In wrapping up their report, Glassnode noted that the market is on the lookout for an indication from American regulators on the outcome of the much-discussed Ether exchange-traded funds (ETFs). While numerous long-term Ether holders have achieved profitable returns, they seem to have no intention of selling their holdings en masse at the present price levels, hinting at possible future profit-making opportunities.
This news piece does not constitute financial advice. Investing and trading in the cryptocurrency market involves significant risk and requires careful research and independent decision-making.
Published At
5/10/2024 1:12:50 PM
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