The two leading cryptocurrencies, Bitcoin and Ethereum, are taking opposite trajectories, which is causing some confusion among investors. According to figures from CoinGecko, Ethereum (ETH) saw a 7% decline last week, reaching $2,525, while Bitcoin (BTC) was relatively stable at $68,957.
This divergence is particularly striking because Bitcoin and Ethereum typically move in tandem. Ben Caselin, head of marketing at cryptocurrency exchange VALR, noted that while Ethereum has outperformed Bitcoin in previous cycles, the current dynamic is different.
Aside from Solana’s (SOL) incredible rally, which is up nearly 7% in the past week, Bitcoin’s strength is being driven by two main factors: investment in Bitcoin spot ETFs and growing memecoin enthusiasm. This rally in BTC and Solana is furthering the divergence trend seen since the launch of Ether spot ETFs in July.
Since the introduction of Ethereum spot ETFs, the price of ETH has fallen by 36%, while Bitcoin has gained a slight 2%.
Despite the excitement surrounding Ethereum ETFs, these financial products are struggling to match the popularity of their Bitcoin counterparts. Data from SoSo Value indicates that Ethereum spot ETFs have seen net outflows exceeding $504 million since July, while Bitcoin ETFs, launched in January, have seen inflows of around $22 billion.
“Regulators and traditional investors seem more inclined to embrace BTC than ETH, at least for now,” observed Shauli Rejwan, managing partner at Masterkey.VC.
Ethereum’s recent decline comes as other layer 1 protocols, such as Solana, gain popularity. Ben Caselin cautioned that there is no guarantee that Ethereum will maintain its dominance in the long term, but he acknowledged that upcoming events, such as the US election, could bring volatility that would potentially benefit ETH in the short term. However, he expressed concern that these events could also serve as an “exit liquidity” point for some investors.
Still, Rejwan remains cautiously optimistic, saying it’s premature to write off Ethereum. He says Wall Street’s interest in Ethereum spot ETFs could take six to 10 months to materialize, but that could accelerate if a bullish trend emerges. EthereumWhy Isn’t Ethereum Price Going Up?