Ethereum Falls Behind BTC. Midway through March, Ether’s price declined from its robust start to the year. Despite a brief uptick in mid-May as investors bet on the US approval of spot Ethereum ETFs, ETH has failed to keep pace with Bitcoin BTC $57,529. Regarding USD pairs, BTC has gained 87% over the past 12 months, while ETH has climbed almost 60%. Discussed here are some reasons why Ethereum has been lagging Bitcoin throughout 2024, as revealed in a recent report titled Digital Assets: Insights and Market Trends, a joint publication of CME Group and Glassnode.
Ether Falls Against BTC in 2024
According to the statistics provided by TradingView, Ether has experienced more significant corrections in 2024, with the most severe correction being a 31% decline from March 12 to May 1. The value of Bitcoin, on the other hand, decreased by 23% during that period.
Ether’s drawdown profile has experienced more severe corrections than Bitcoin’s; the largest loss in the 2022-24 cycle is -42%. Bitcoin’s drawdown profile has been more stable. More than sixty-five percent of the drops occurred at the beginning and the end of the macro bull markets in previous cycles. As stated in the study by Glassnode-CME Group, the “ETH/BTC ratio has continued to decline” for the entirety of the 2023-24 cycle. This suggests that investors, on the whole, are not very enthusiastic about taking risks during this cycle.
Ethereum Falls Behind BTC: Several factors, including the United States’ acceptance of spot Bitcoin exchange-traded funds (ETFs) in January 2024 and the rise of competing proof-of-stake blockchains, are listed in the research as explanations for Ether’s poor performance. However, the research also suggests that this downward trend may be about to end due to the launch of Ethereum U.S. Spot ETFs.
ETH 2024 Volatility is Lower than Past Cycles
Investor profitability was measured using the Market Value Realized Value (MVRV) ratio, derived using on-chain measurements provided by market intelligence business Glassnode. Market Volatility Ratio (MVRV) measures the average market’s unrealized profit or loss by tracking the gap between Market Cap and Realized Cap. Although this indicator has been trending upwards since October 2023, the analysis found that its value of approximately 1.8 is significantly lower than the 6.2 and 3.8 maxima seen in the 2017 and 2021 bull cycles, respectively.
While Ethereum investors have bigger amounts of unrealized profits on average, Bitcoin investors have a much larger amount, with an MVRV ratio of about 2.5, according to the analysis. Bitcoin is still more valuable to investors than Ethereum, and they would prefer to put their money into the original cryptocurrency rather than Ether.
Ethereum Falls Behind BTC: K33 Research agrees, saying that the market has “under-appreciated Ether’s potential” even though following performance this year (the ETH/BTC ratio is still stubbornly trading near 3-year lows). Therefore,
A senior analyst at K33 Research, Vetle Lunde, stated, “We believe the market underestimates the ETH ETF effect and forecast that US ETH ETFs will absorb 1% of the circulating ETH supply.”. In the second half of 2024, Lunde predicts that Ethereum (ETH) could outperform other cryptocurrencies like Glassnode and CME Group.
ETH Futures Trade Volumes Trail Bitcoin’s
There is still a lot of trading activity in digital asset markets coming from futures markets, which are “five times to ten times larger in size than spot trading volumes,” as stated in the analysis by Glassnode and CME Group.
Derivatives trading volumes for Ether are still far smaller than for Bitcoin, even though the cryptocurrency’s open interest is high in 2024, hitting a record high of $17.09 billion on May 29, according to statistics from Glassnode. More purchasing and higher prices could be in store if futures trading volumes continue to rise, indicating strong investor confidence and excitement.
Below is a graphic showing the increased futures market trade volumes since October 2023. Ethereum sees $26.7 billion in daily contracts traded, while Bitcoin sees over $34.4 billion. “This level of daily trade volume is comparable to the last market cycle, although it is still lower than the all-time highs recorded in the first half of 2021.”
Some believe that Wall Street may utilize Ethereum tokens as a wager on the expansion of Web3, which would explain why experts are optimistic that spot Ethereum ETFs would cause ETH to achieve new highs, even though Ether has underperformed Bitcoin. Some analysts predict that spot Ethereum ETFs might draw over $15 billion in the first few months, sending the price of ETH to soar above $10,000.
