Ethereum (ETH)’s 14% Price Drop Overshadows Improvements in Investor Interest: Report

Ether (ETH) prices surged 77% year-to-date to $2,715 on the back of spot bitcoin exchange-traded funds (ETFs) in the United States. But in the weeks since, ETH prices have softened along with the rest of the market.

Recent data from chain analytics firm Glassnode shows that despite the current downturn, Ether has outperformed Bitcoin (BTC) in several areas.

ETH will cover BTC

Glassnode's latest “The Week Onchain” report highlights ETH's outperformance of Bitcoin “quarterly, monthly and weekly.”

Analyst Alice Kohn sees a significant increase in the price of Ether in Bitcoin of more than 20%, a trend that coincides with similar activity in the ETH derivatives market.

Glassnode notes that this performance coincides with a further decline in ETH's market dominance. According to the chart below, ETH has gained 2.9% in market cap compared to Bitcoin since the spot BTC ETF was approved.

Positive market sentiment is reflected in ETH's unrealized profit/loss ratio

Ether is down 14 percent in the past week, but market sentiment around the cryptocurrency remains positive. This shows that the amount of net profit locked in by ETH investors has reached a new multi-year high, indicating significant changes in investor profitability.

Kohn said:

Profit-taking has increased since mid-October, peaking at more than $900 million on January 13, coupled with investors taking advantage of ‘news-on-the-news' momentum.

Perhaps the most important indicator supporting Ether's positive sentiment is the Net Unrealized Profit/Loss (NUPL) measure for short-term token holders.

NUPL measures the potential profit or loss investors can hold on an asset based on the price at which they get their coins.

This measure has surpassed 0.25 for the first time since November 2021's all-time high, reflecting optimism among owners.

According to Kohn, this could mean either a positive level of market sentiment is “going in for ETH” or that “markets are taking a pause to save distribution pressure.”

Related: Socket Protocol Recovers Two-Thirds of Stolen ETH From Hack

Trader Ken expressed this hope that the ETH/BTC combination is about to break with the price of Ether above $2,240.

$ETH

Longer than 2240 retest, targeting liquidation at 2500

As the ETH/BTC combination approaches a repeated attempt to break out

Manual stop for now, just like BTC pic.twitter.com/DxWt4aYxZa

— Ken (@KenCharts) January 24, 2024

ETH shows dominance in the derivatives market

The recent decline in Ether's market performance, as noted in a Glassnode report, suggests that there may be a shift in capital flows in the crypto market. A closer look at derivatives data shows that Bitcoin Perpetual swaps held 55% open interest in January 2022, which has since risen to 66.2%.

In comparison, “ETH open interest dominance has decreased from 45% to 33.8% between 2022 and 2024,” Glassnode notes.

However, ETH has regained some market share, with its dominance rebounding to around 40% following the approval of the ETF.

Ether's recent market performance has led to speculation among investors about the introduction of a spot Ether ETF.

According to Lucas Kiely, chief investment officer of the Yild app, it is now clear that after the Bitcoin ETF – with seven timeframes between May and August – the Ether ETF may come in faster than expected.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.