Most large-cap cryptocurrencies, including Bitcoin and Ethereum, have not exactly lived up to the hype and promise in the second half of 2024. Investors saw the general market experience a negative start to the past week, with most assets shedding a significant portion of their value.
Interestingly, this recent price action has offered a unique insight into the current state of the crypto market and its relationship with the macro capital markets.
Spot Bitcoin ETFs Vs. Ethereum ETFs — Relative Impact?
In a recent report, trading firm QCP Capital shared their observation on the Bitcoin and Ethereum markets following the significant drawdown on Monday, August 5. According to the firm, there has been a fundamental change in the liquidity profile of ETH relative to BTC, the largest cryptocurrency by market cap.
According to QCP Capital, Bitcoin is becoming increasingly incorporated into the mainstream capital markets, including the stock and bond markets. On the other hand, Ethereum — the second-largest cryptocurrency — is being pushed to the sidelines.
This liquidity shift was further spotlighted in the broad market downturn experienced on Monday, where BTC fell by only 16% compared to ETH’s 22% price decline. Moreover, Bitcoin’s price is almost around where it was a week ago — closing in on $61,000, while ETH is still a little off pace.
QCP Capital noted that this trend appears to result from the “distinct lack of interest” in the recently launched spot Ethereum exchange-traded funds (ETFs) relative to their BTC counterparts. “BTC as digital gold is a compelling narrative to investors while ETH is lacking one,” the firm said.
This lack of a selling point for Ethereum — especially amongst the older generations — was one of the talking points following the ETH ETF approval. Interestingly, the slow start of these funds may give some credence to the early concerns.
Liquidity Shift Not Necessarily A Bad Thing: QCP
There is still some upside for Ethereum despite not penetrating the traditional markets as potently as Bitcoin, according to QCP Capital. The trading firm added:
As a more speculative and more volatile asset, the propensity for exponential price gains comes along with the potential for larger drawdowns.
QCP revealed that the difference in the implied volatility between BTC and ETH was closer to 5% prior to the launch of the spot Ethereum ETFs. However, this difference has now grown to more than 20% since the exchange-traded funds made their debut.
As of this writing, the price of Ethereum is hovering around $2,600 while Bitcoin looks to hold above $61,000.
Featured image from iStock, chart from TradingView
Opeyemi Sule
Opeyemi is a proficient writer and enthusiast in the exciting and unique cryptocurrency realm. While the digital asset industry was not his first choice, he has remained absolutely drawn since making a foray into the space over two years. Now, Opeyemi takes pride in creating unique pieces unraveling the complexities of blockchain technology and sharing insights on the latest trends in the world of cryptocurrencies.
Opeyemi savors his attraction to the crypto market, which explains why he spends the better parts of his day looking through different price charts. “Looking” is a rather simple way to describe analyzing and interpreting various price patterns and chart formations. However, it appears that is not Opeyemi’s favorite part – in fact, far from it.
Being able to connect what happens on a price chart to on-chain movements and blockchain activities is what keeps Opeyemi ticking. “This emphasizes the intricacies of blockchain technology and the cryptocurrency market,” he would say. Most importantly, Opeyemi thinks of any market insights as the gospel, while recognizing that he is only a messenger.
When he is not clicking away at his keyboard, Opeyemi is most definitely listening to music, playing games, reading a book, or scrolling through X. He likes to think he is not loyal to a particular genre of music, which can be true on many days. However, the fast-rising Afrobeats genre is a staple in Opeyemi’s Spotify Daily Mix.
Meanwhile, Opeyemi is a voracious reader who enjoys a wide category of books – ranging from science fiction, fantasy, and historical, to even romance. He believes that authors like George R. R. Martin and J. K.
Rowling are the greatest of all time when it comes to putting pen to paper. Opeyemi believes his reading of the Harry Potter series twice is proof of that.
Indeed, Opeyemi enjoys spending most of his time within the four walls of his home. However, he also sometimes finds solace in the company of his friends at a bar, a restaurant, or even on a stroll. In essence, Opeyemi’s ambivert (haha! been searching for an opportunity to use the word to describe myself) nature makes him a social chameleon who is able to quickly adapt to different settings.
Opeyemi recognizes the need to constantly develop oneself in order to stay afloat in a competitive and ever-evolving market like crypto. For this reason, he is always in learning mode, ready to pick up the slightest lesson from every situation. Opeyemi is efficient and likes to deliver all that is required of him in time – he believes that “whatever is worth doing at all is worth doing well.” Hence, you will always find him striving to be better.
Ultimately, Opeyemi is a good writer and an even better person who is trying to shed light on an exciting world phenomenon – cryptocurrency. He goes to bed every day with a smile of satisfaction on his face, knowing that he has done his bit of the holy assignment – spreading the crypto gospel to the rest of the world.
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