Ethereum price slows due to ‘weak capital turnover’, but crypto macro gains remain
Ethereum (ETH) price continues to underperform Bitcoin's 2024 gains, but Glassnode analysts suggest brighter days may lie ahead.
“Weak capital turnover” is behind the underperformance of Ether's price.
According to data from Cointelegraph Markets Pro and TradingView, Ethereum has underperformed Bitcoin over the past two years, resulting in a weak ETH/BTC ratio that hit a low of $0.04622 on May 1, the lowest since April 2021.
Glassnode attributed Ethereum's underperformance relative to Bitcoin to a “quantifiable lag in speculative demand” from the STH team.
The report defines the short-term holder group as “investors who have purchased their coins within the last 155 days and are often considered a proxy for new investor interest.”
Analysts at Glassnode explained that BTC has experienced a “significant increase in activity” in terms of capital accumulation among STHs since reaching its peak in March. This is not reflected in ETH, which has yet to break its previous all-time high.
The company's on-chain data shows that while Bitcoin's STH-Realized Cap has reached the same level as the peak of the last bull run, ETH's STH-Realized Cap is still less than half of previous cycle levels, indicating a lack of new capital inflows. .
“In many ways, this lack of new capital inflows is a reflection of ETH's underperformance relative to BTC.”
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The market is in the “early stages of macro growth.”
Historically, Ether's price performance has been closely tied to Bitcoin's price movements, and recent price action reflects this relationship.
Bitcoin fell 11 percent to a two-month low of $56,500 after a fourth-half decline. Bitcoin price has strengthened in the $62,700 and $65,550 price range in the last two days after recovering.
Ether experienced a similar correction after its halving with a 6% drop, recording its worst “post-halving performance” ever, according to Glassnode.
However, at an all-time high of $73,835, Glass notes Bitcoin's price is down 20.3% – the deepest correction to close since the Nov-2022 FTX low.
“That said, this macro start still looks like one of the strongest corrections in history with relatively shallow corrections.”
Using the Net Unrealized Profit/Loss (NUPL) measure, the on-chain data analytics firm found that both Ether and BTC still have relatively low realized caps associated with long-term holders (LTHs), suggesting the market is in its infancy. Levels of macro development.
In an earlier report, Glassnode confirmed that capital inflows into ETH lag behind those into BTC. For example, in the 2021 cycle, capital inflows into BTC peaked 20 days before inflows into ETH.
Using the 30-day change in realized cap to track capital swings between these two assets, Glassnode analysts have found that ETH STH Realized Cap is picking up momentum in the current cycle.
“The short-term margin for both assets has risen ahead of the 2021 cycle high. This year, BTC's short-term margin raised cap hit a new all-time high, while ETH's benchmark could not go much higher.”
Glassnode concludes that while the post-halving market action has played out similarly to previous cycles, several data points indicate that Ether has underperformed relative to BTC.
When we break down capital flows and rotations between BTC and ETH, we see that Bitcoin received the lion's share. Short-term holders and speculators seem to be concentrated in Bitcoin, to the point of a dramatic spillover into Ethereum.
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.
