Bitcoin (BTC) & Ethereum (ETH): Performance Analysis Post-January’s ETF Approval

• Ethereum has been experiencing a decline in capital inflows since January, compared to Bitcoin.
• Despite a statistically positive correlation with Bitcoin, Ethereum’s performance has been lackluster.
• Long-term holders of Ethereum continue to wait for a new all-time high.

Despite a positive correlation with Bitcoin, Ethereum has been underperforming since January. This article delves into the reasons behind this trend and what it means for long-term Ethereum holders.

Ethereum’s Declining Capital Inflows

According to a recent report by on-chain data provider Glassnode, Ethereum has been recording a decline in trading activity since the beginning of the year. This is in stark contrast to Bitcoin, which has seen significant capital inflows, partly due to the approval of US spot exchange-traded funds (ETFs).

Ethereum Remains in Bitcoin’s Shadow

Following the approval of Bitcoin ETFs in January, Glassnode data shows a significant divergence in Net Unrealized Profit/Loss (NUPL) between Bitcoin and Ethereum. The NUPL metric determines 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. This data suggests that Bitcoin investors have captured a larger share of profits compared to Ethereum investors since January.

Lack of New Capital Inflows for Ethereum

Unlike Bitcoin, Ethereum has yet to see a strong inflow of new capital since spot ETFs became tradable in the US. Glassnode’s assessment of the Short-Term Holders’ Realized Cap for both coins found that Ethereum’s remains low, indicating reduced activity from short-term investors. These investors significantly influence an asset’s price performance, and their lack of activity is a reflection of Ethereum’s underperformance relative to Bitcoin.

Long-Term Holders Waiting for Better Profit-Taking Opportunities

Due to the difference in the performance of the coins, Bitcoin and Ethereum’s long-term holders (LTHs) have adopted different strategies. While Bitcoin’s LTHs have let go of some of their holdings to book profits following the coin’s rally to a new all-time high, Ethereum’s LTHs appear to still be waiting for better profit-taking opportunities.

Conclusion

In conclusion, despite sharing a statistically positive correlation with Bitcoin, Ethereum has been underperforming since January. This trend has been attributed to a decline in trading activity and a lack of new capital inflows. However, long-term Ethereum holders continue to hold on, waiting for a new all-time high.