The price of Ethereum is experiencing a lag due to a weaker capital rotation, according to experts at TradingView. Despite this setback, the overall trend in the crypto Market remains upward. Stay tuned to TradingView News for more updates on the crypto Market.
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Ethereum’s (ETH) price continues to underperform compared to Bitcoin’s 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 Ethereum 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 Ethereum’s under-performance this cycle relative to Bitcoin is due to a “measurable lag in speculative interest” from the STH cohort. The report defines the Short-Term Holder 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 firm’s on-chain data reveals that while Bitcoin’s STH-Realized Cap is nearly at the same level as the last bull run peak, ETH’s STH-Realized Cap is still less than half of previous cycle levels, suggesting a markedly lackluster inflow of new capital.
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 and $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.
Using the Net Unrealized Profit/Loss (NUPL) metric, the on-chain data analytics firm found that both Ether 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.”
In an earlier report, Glassnode established that capital inflows into ETH tend to lag behind those into BTC. Using a 30-day change in the Realized Cap to monitor the rotation of capital between these two assets, Glassnode analysts found that ETH STH Realized Cap is yet to pick up momentum in the current cycle.
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.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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1. Why is Ethereum’s price lagging behind other cryptocurrencies?
– Ethereum’s price is lagging due to weaker capital rotation, meaning investors are putting their money into other cryptocurrencies instead.
2. Is the overall trend for cryptocurrencies still positive despite Ethereum’s lagging performance?
– Yes, the macro uptrend for cryptocurrencies remains strong, indicating that the overall Market is still bullish.
3. Will Ethereum’s price eventually catch up to other cryptocurrencies?
– It is possible that Ethereum’s price could eventually catch up as Market conditions change and investor sentiment shifts.
4. What factors could help Ethereum’s price increase in the future?
– Improvements in Ethereum’s technology, increased adoption, and positive Market developments could all contribute to a price increase for Ethereum.
5. Should investors be concerned about Ethereum’s lagging price performance?
– While Ethereum’s lagging price performance may be cause for concern for some investors, it is important to consider the overall Market trend and potential for future growth in the cryptocurrency space.
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