This poor performance compared to Bitcoin over the last two years is also an indicator of the weakening of the ETH/BTC rate.
According to analytics firm Glassnode, Ethereum's cryptocurrency ETH has performed poorly compared to Bitcoin in the last market cycle.
In their May 7 newsletter, “The Week On-Chain,” they discussed the impact of speculators on ETH prices and the ongoing challenges facing Ethereum following Bitcoin’s block reward halving in April.
After the halving, there was a drop in the prices of both Bitcoin and Ethereum.
The decline in BTC/USD was particularly significant, marking one of its biggest declines since the FTX crash in late 2022. Ethereum showed a similar trend but with less severe corrections, giving the impression of a resistance level.
Glassnode noted: “We can see a similar pullback structure for Ethereum, with notably lighter corrections since the FTX lows.”
“This indicates a degree of resilience during pullbacks and a clear reduction in volatility in the digital asset space.”
Despite this resistance, Ethereum's deepest pullback this cycle reached -44%, which is more than twice as large as Bitcoin's -21% decline.
This weak performance compared to Bitcoin over the last two years is also an indicator of the weakening of the ETH/BTC rate.
Currently, ETH's price pullbacks are tapering off, but this offers little consolation to new investors, especially short-term holders of Ethereum (STHs), i.e. those who hold their coins for 155 days or less.
These investors may face the risk of loss, where the sum of their cumulative cost basis is around $3,000 to the current market price of ETH.
Analysis of Glassnode's market capitalization to realized value (MVRV) ratio evaluates unrealized profit and loss at current prices and indicates potential panic among these new investors if prices fall further.
They used the following expression:
“Ethereum's STH-MVRV is currently trading at a very slight premium, which may indicate that spot prices are too close to end buyers' cost bases and they may panic if the market experiences downside volatility.”
A more global audience is also closely following regulatory developments in the US, particularly decisions regarding the approval of spot Ethereum exchange-traded funds (ETFs).
Meanwhile, long-term holders of Ethereum (LTHs) appear to be more patient, refraining from selling despite having profitable positions.
Glassnode explains: “If we look at Profit by Volume Spent of LTHs, we see that the group of BTC holders held between 6 months and 2 years increased their sales in the ATH rally.
From this perspective, it looks like Ethereum's Long-Term Holders will continue to wait for better profit-taking opportunities once again.
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