09 May

A recent report from Glassnode indicates that Ethereum (ETH), one of the prominent alternative cryptocurrencies, has shown weaker performance compared to Bitcoin (BTC) since January. 

The on-chain data provider highlights that while BTC has experienced notable capital inflows, partly attributed to the introduction of US spot exchange-traded funds (ETFs), ETH has witnessed a decrease in trading activity during the same period.

Ethereum (ETH) continues to be overshadowed by Bitcoin (BTC)

Following the approval of spot Bitcoin ETFs on January 10th, Glassnode data reveals a notable discrepancy in Net Unrealized Profit/Loss (NUPL) between BTC and ETH.

The NUPL metric gauges whether an asset's holders are experiencing unrealized gains or losses by comparing the average purchase price of all tokens held by investors to the current market price. A value exceeding 0.5 is deemed significant, indicating that an asset's unrealized profit surpasses 50% of its total market capitalization.

Glassnode observed that amidst the excitement and market surge following the approval of spot Bitcoin ETFs, Bitcoin holders saw a more rapid expansion in unrealized profits compared to Ethereum investors. Consequently, the Bitcoin NUPL metric surpassed 0.5 and entered the euphoria phase three months earlier than the equivalent metric for Ethereum.

Moreover, Ethereum has yet to witness a substantial influx of new capital similar to Bitcoin since the introduction of spot ETFs in the US. Glassnode's analysis of Short-Term Holders’ Realized Cap for both coins indicates that Ethereum's remains relatively low, suggesting diminished activity from short-term investors, whose actions significantly impact an asset's price performance.

This lack of new capital inflows is seen as a reflection of Ethereum's underperformance relative to Bitcoin, partially attributed to the attention and accessibility brought about by spot Bitcoin ETFs.

Glassnode also highlighted that the market is awaiting the SEC's decision on the approval of a suite of Ethereum ETFs expected towards the end of May, which could potentially alter the dynamics.

Furthermore, the disparity in performance has led to varying strategies adopted by Bitcoin and Ethereum's long-term holders (LTHs). While Bitcoin's LTHs have taken the opportunity to book profits by selling some of their holdings following the coin's rally to a new all-time high, Ethereum's LTHs seem to be awaiting better profit-taking opportunities.

May 2024, Cryptoniteuae

* The email will not be published on the website.