Ether price lags amid weaker capital rotation, but crypto uptrend holds

The price of Ethereum (ETH) has been lagging behind Bitcoin’s (BTC) gains in recent years, resulting in a weaker ETH/BTC ratio. Analysts from Glassnode suggest that there may be brighter days ahead for Ethereum. The underperformance of Ethereum is attributed to a “weaker capital rotation,” with Bitcoin experiencing more speculative interest and capital accumulation among short-term holders (STHs) leading up to its all-time highs. Ethereum’s STH-Realized Cap is still significantly lower than previous cycle levels, indicating a lack of new capital inflow.

Historically, the price movement of Ethereum has closely followed that of Bitcoin, and the recent price action reflects this correlation. Both cryptocurrencies experienced a sell-off after the halving, with Bitcoin dropping by 11% and Ethereum by 6%. Bitcoin’s price has since recovered and consolidated within a particular price range, while Ethereum’s performance has been lackluster compared to its previous all-time high.

Glassnode’s on-chain data suggests that both Bitcoin and Ethereum are still in the early stages of a macro uptrend, as indicated by the relatively low Realized Cap associated with long-term holders (LTHs). Glassnode also found that capital inflows into Ethereum tend to lag behind those into Bitcoin, with the peak influx of new capital into Bitcoin occurring before Ethereum in previous cycles.

Using the 30-day change in the Realized Cap as a measure of capital rotation, Glassnode analysts observed that Ethereum’s STH Realized Cap has yet to gain momentum in the current cycle. This indicates that short-term holders and speculative activity are primarily focused on Bitcoin, with little spill-over into Ethereum.

While the market action after the halving has followed a similar pattern to previous cycles, Ethereum has underperformed relative to Bitcoin. Bitcoin has received the majority of inflows, possibly driven by the introduction of US spot ETFs. Speculative interest and capital rotation seem to be concentrated in Bitcoin, with very little impact on Ethereum so far. Glassnode’s analysis suggests that there may be a brighter future for Ethereum, with the market still in the early stages of a macro uptrend.