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Ethereum price falls behind due to ‘weaker capital rotation,’ but overall crypto market trend remains positive


Glassnode Analysts Predict Brighter Days Ahead for Ether (ETH) as Price Underperforms Compared to Bitcoin (BTC) Gains

Title: Glassnode Analysts Predict Brighter Days Ahead for Ether Despite Underperformance Compared to Bitcoin

Ether’s (ETH) price continues to underperform compared to Bitcoin’s (BTC) 2024 gains, but Glassnode analysts suggest that brighter days could lie ahead.

A “weaker capital rotation” is behind Ether’s price underperformance

Data from Cointelegraph Markets Pro and TradingView shows that Ether has been underperforming Bitcoin over the last two years, resulting in a weaker ETH/BTC ratio, which reached a low of $0.04622 on May 1, the lowest since April 2021.

Glassnode said Ether’s under-performance this cycle relative to Bitcoin is due to a “measurable lag in speculative interest” from short-term holders (STHs).

The report defines the STH cohort as “investors who acquired their coins within the last 155 days and are often considered a proxy for new investor demand.”

Glassnode analysts explained that BTC experienced a “noticeable increase in speculative activity” in terms of capital accumulation among STHs in the run-up to all-time highs in March. This has not been reflected in ETH, which is yet to breach its previous all-time high.

The market is in the “early stages of a macro uptrend”

Historically, Ether’s price performance has been closely linked to Bitcoin price moves, and the recent price action reflects this relationship.

Bitcoin experienced a sell-off after the fourth halving, dropping 11% to a two-month low of $56,500 on May 1. Bitcoin’s price has since recovered, consolidating within the $62,700–$65,550 price range over the last two days.

Ether experienced a similar correction after the halving with a 6% drop, recording the “worst post-halving performance” ever, according to Glassnode.

However, measured from the $73,835 all-time high, Glassnode noted that Bitcoin’s price fell by 20.3% — the deepest correction on a closing basis since the FTX lows in November 2022.

Using the Net Unrealized Profit/Loss (NUPL) metric, the on-chain data analytics firm found that both ETH and BTC still have a relatively low realized cap associated with long-term holders (LTHs), suggesting the market is “within the early stages of a macro uptrend.”

Glassnode concludes that while the post-halving market action has played out remarkably similar to previous cycles, several data points indicate that Ether has underperformed relative to BTC.

“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.”

Overall, despite Ether’s current underperformance, Glassnode analysts remain optimistic about the future potential of the cryptocurrency and believe that brighter days could be ahead.


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