Ethereum's Performance Trails Bitcoin Due to Weaker Capital Rotation: Glassnode Report
Summary:
Ethereum's (ETH) slower growth compared to Bitcoin’s 2024 gains could be due to a "weaker capital rotation," according to data from Glassnode. Decreased speculative interest from short-term holders is noted as a key factor behind Ethereum's underperformance. While both Ethereum and Bitcoin showed similar price movement patterns after Bitcoin’s fourth halving, Ethereum's post-halving performance has been judged as the "worst ever." Despite these findings, Glassnode points to the early stages of a potential long-term macro upswing.
Ethereum (ETH), while not demonstrating the same vigorous growth as Bitcoin's 2024 gains, may be on the brink of a bullish cycle, according to analysts from blockchain analytics company Glassnode. The lag in Ethereum's performance is attributed to slower capital rotation. Data from Cointelegraph Markets Pro and TradingView reveals that Ethereum's trajectory has been underwhelming compared to Bitcoin in the last couple of years. This is evident in the less than desirable ETH/BTC ratio, which recently hit its lowest point since April 2021 at $0.04622 on May 1st.
The Glassnode report pointed towards a discernible gap in speculative interest from Short-Term Holders (STH) as the reason behind Ethereum's slower cycle compared to Bitcoin. These so-called STHs, as defined by Glassnode, are those investors who made their purchases within the past 155 days, often seen as the gauge for fresh capital influx.
Bitcoin saw a surge in speculative interest by capital rich STHs ahead of its March all-time highs, a fact not mirrored in Ethereum's performance. Even though Bitcoin's STH-Realized Cap is closing in on its last bullish peak, Ethereum's equivalent is just under half the levels seen in the previous cycle. This points to a subdued inflow of new capital, a probable cause of Ethereum's slower growth compared to Bitcoin.
A closer look at historical trends reveals similarities in price fluctuations for Ethereum and Bitcoin. Bitcoin's price dropped 11% post its fourth halving, touching a two-month low of $56,500 on May 1, before climbing back within the $62,700 to $65,550 price bracket later. Ethereum registered a similar pattern, experiencing a 6% dip post-halving. This was Ethereum's lowest performance measurement after a halving.
Despite Bitcoin's price sinking 20.3% from its $73,835 all-time high, marking the steepest fall since the dramatic decline during November 2022’s FTX crisis, the cryptocurrency maintains a comparatively stable macro uptrend. Using the Net Unrealized Profit / Loss (NUPL), Glassnode's analysts observe similar patterns for both Ethereum and Bitcoin, indicating the potential beginning of a long-term macro upswing.
Earlier reports by Glassnode had mentioned capital inflow into Ethereum typically trailing that into Bitcoin. For example, during the 2021 cycle, the peak of new capital for Bitcoin occurred 20 days prior to it happening for Ethereum. The underperformance, as the data suggests, is leaning towards Bitcoin, driven in part by US spot ETFs, where most of the short-term holding and speculative activity is situated, with less spill-over into Ethereum.
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Published At
5/7/2024 11:40:00 PM
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