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Cryptocurrency News Articles
Ethereum's Ether (ETH) Lags Behind Bitcoin in Tumultuous Crypto Market Amid Speculator Sell-Off Concerns
May 10, 2024 at 06:01 pm
Ethereum's Ether (ETH) has underperformed compared to Bitcoin (BTC) during the current market cycle, and new holders now face the risk of losses. Analytics firm Glassnode reports that Ether's price has been supported by speculators, but recent price declines have brought short-term holders (STHs) close to their cost basis. STHs may panic and sell if the market experiences further volatility, while long-term holders (LTHs) remain reluctant to take profits at current prices, indicating they are waiting for better opportunities.
Ethereum's Ether (ETH) Lags Behind Bitcoin in Turbulent Crypto Market
In an in-depth market analysis published on May 7th, the analytics firm Glassnode has unveiled the pivotal role played by speculators in bolstering the price of Ethereum (ETH).
Despite the recent correction in both Bitcoin (BTC) and Ether, Ethereum's price action has been particularly concerning for investors, as it has underperformed compared to its larger counterpart. Glassnode's analysis suggests that Ethereum speculators may be teetering on the brink of "panic" as prices continue to decline.
Ethereum Speculators on the Verge of Panic
Since April's Bitcoin block subsidy halving, both Bitcoin and Ether have experienced downward pressure on prices. However, the past few weeks have been particularly challenging for Ethereum bulls, with the BTC/USD pair experiencing one of its most significant drawdowns since the FTX debacle in late 2022.
Glassnode's analysis reveals that Ethereum has exhibited a similar drawdown structure, although with less severe corrections since the lows witnessed following the FTX collapse. This indicates a degree of resilience during pullbacks, as well as a decline in volatility across the digital asset space.
However, it's crucial to note that Ethereum's deepest drawdown of the current cycle has reached -44%, more than double Bitcoin's -21%. This disparity highlights Ethereum's relative underperformance over the past two years, which is reflected in a weakening ETH/BTC ratio.
Drawdowns and Short-Term Holders
As Ethereum's price drawdowns continue, certain investor groups risk incurring losses on their holdings. Ethereum's short-term holders (STHs), who hold coins for 155 days or less, have an aggregate cost basis of $3,000.
ETH/USD continues to trade around that level, with a brief dip below it last week quickly bought up, according to data from Cointelegraph Markets Pro and TradingView.
Analyzing Ethereum's market value to realized value (MVRV) metric, Glassnode suggests that a further market decline could trigger panic selling among STHs. MVRV measures unrealized profit and loss, in this case for STHs, at a given price.
"Ethereum's STH-MVRV is trading at a very slight premium at the moment, which could suggest that spot prices are very close to the cost basis of recent buyers, who may panic should the market experience downside volatility," warns Glassnode.
Long-Term Holders Hold Strong
In contrast to STHs, Ethereum's long-term holders (LTHs) appear unwilling to sell en masse at current prices, despite many already holding healthy profit margins.
"If we examine the Spent Volume in Profit for LTHs, we can see that the cohort of BTC holders who have held for between 6 months and 2 years increased their divestment during the ATH rally," states Glassnode.
"From this lens, Ethereum's Long-Term Holders once again appear to still be waiting for better profit-taking opportunities."
Market Awaits Regulatory Clarity
Glassnode acknowledges that the market is anticipating signals from United States regulators regarding the fate of spot Ether exchange-traded funds (ETFs). While the approval of an ETF could boost institutional adoption and provide a bullish signal, it remains to be seen when such a development will occur.
Conclusion
Ethereum's underperformance and the potential for panic selling among STHs highlight the ongoing challenges in the crypto market. Speculators play a significant role in driving prices, but their confidence can quickly evaporate when market conditions turn sour.
However, long-term holders continue to exhibit patience and may be waiting for a more favorable market environment to take profits. As the regulatory landscape evolves and the broader market sentiment shifts, the fate of Ethereum and other cryptocurrencies remains uncertain.
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The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
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