Most large-cap cryptocurrencies, including Bitcoin and Ethereum, have fallen short of expectations and promises in the second half of 2024. Investors saw a generally negative start to the market last week, with most assets losing a significant portion of their value.
Interestingly, this recent price action has provided a unique insight into the current state of the cryptocurrency market and its relationship with the overall capital markets.
Bitcoin ETFs vs Ethereum ETFs – Is There a Relative Impact?
In a recent report, trading firm QCP Capital stated: subscriber Bitcoin Company released its report on the Bitcoin and Ethereum markets after the significant drop on Monday, August 5. According to the company, there has been a significant change in the liquidity profile of ETH compared to BTC, the largest cryptocurrency by market cap.
According to QCP Capital, Bitcoin is increasingly being integrated into major capital markets, including stocks and bonds. On the other hand, Ethereum, the second-largest cryptocurrency, is being pushed to the sidelines.
These shifts in liquidity further highlighted the broad market pullback seen on Monday, with Bitcoin down just 16% compared to Ethereum’s 22% drop. Moreover, Bitcoin is close to where it was a week ago — approaching $61,000, while Ethereum is still some way off.
QCP Capital noted that the trend appears to be driven by a “clear lack of interest” in recently launched Ethereum ETFs compared to their Bitcoin counterparts. “Bitcoin as digital gold provides a compelling story for investors while Ethereum lacks such a story,” the firm said.
this No point of sale Concerns about Ethereum — particularly among older generations — have been one of the talking points following the approval of the ETH ETF. Interestingly, the slow start to these funds may lend some credence to early concerns.
Liquidity Shift Isn’t Necessarily a Bad Thing: QCP
There is still some upside to Ethereum despite not penetrating traditional markets as strongly as Bitcoin, according to QCP Capital. The trading firm added:
As a more speculative and more volatile asset, the tendency for massive price gains comes along with the potential for larger declines.
QCP revealed that the difference in implied volatility between BTC and ETH was closer to 5% before the launch of the Ethereum ETF. However, this difference has now grown to more than 20% since the ETF first appeared.
At the time of writing, Ethereum is hovering around $2,600 while Bitcoin looks set to remain above $61,000.
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