The Disappointing Performance of ETH ETF: What's Behind it?

It was late in July that the US Securities and Exchange Commission (SEC) allowed the first spot Ethereum ETFs to start trading, which came following the approval of spot Bitcoin ETFs in January.

Bitcoin (BTC) price briefly surged past the $93K on Wednesday to hit a new all-time high (ATH) of $93,477. However, since then, prices have taken a breather, and at the time of writing, BTC/USD is trading at $88,430, up 110% year-to-date (YTD).

These gains follow a 154.5% return recorded by the world's largest asset with a market cap of $1.8 trillion in 2023.

While to some it may seem it's now too late to buy Bitcoin, that may not be the case according to Galaxy Digital's Mike Novogratz and Bitwise's chief investment officer, Matt Hougan, who believes $500k is coming for BTC.

These bold targets are contingent on Bitcoin being accepted as a store of value and President-elect Donald Trump delivering on his promise of setting up a BTC Strategic Reserve. So, there's, of course, no guarantee that Bitcoin will hit these numbers. For now, the big target that the crypto king must first hit is $100,000.

With Bitcoin hitting new ATHs every other day now, the market sentiments have shifted to euphoria across the broad crypto market. These sentiments have the total cryptocurrency market cap now sitting around $3.144 trillion, surpassing the Nov. 2021 peak.

Amidst this bull market mania, which is inducing FOMO among traders and investors, Ethereum continues to suffer.

The second largest cryptocurrency with a market cap of $386 billion is currently trading at $3,069, still 37% away from its 2021 ATH of $4,880. So far, in 2024, ETH has only managed to go up by a meager 40%, trailing behind the equally lackluster performance from last year when it only registered a 90% upside.

Even Bitcoin Cash has managed to record 69% gains YTD. If we take a look at the coins among the top 100 cryptos by market cap that have performed poorly than ETH, they include the likes of XRP, ADA, AVAX, UNI, LINK, DOT, ICP, XLM, ETC, KAS, STX, MNT, RUNE, PYTH, POL, XMR, ARB, FIL, INJ, HBAR, TIA, VET, OP, IMX, ATOM, SEI, GRT, WLD, MKR, BSV, ALGO, LDO, BTT, GALA, and HNT.

While ETH is struggling against USD, it is getting absolutely demolished against BTC, with the ETHBTC ratio continuing to hit new multi-year lows. Currently, the ETHBTC ratio is at 0.0349, aiming for a new 2024 low, which, if things continue to go as they are, may come soon enough.

In contrast, the SOLETH is rising to new highs. During the peak of the last bull market, the SOLETH ratio topped out at $0.05785. During the subsequent bear market, this ratio fell as low as 0.0069 when the SOL price dropped below $10 after the FTX bankruptcy.

However, ever since then, the SOLETH has been on the rise, climbing to a new high of 0.0723 on Nov. 6. These new highs reflect Solana rapidly closing the gap with Ethereum in almost every economic metric.

A report by hedge fund Syncracy Capital revealed that Solana's real economic value (REV) was just 1% of Ethereum's REV in Oct. 2023, only to surge to 111% a year later, in Oct. 2024. This growth was driven mainly by meme coin mania, which led to higher network volumes, higher fees, and higher total value locked (TVL).

Interestingly, Ethereum's modest gains came despite the crypto asset being approved for a spot exchange-traded fund (ETF), which was expected to drive ETH to new highs. Back in July, Hougan of Bitwise had forecasted that the price of Ethereum could surge past $5,000 following the ETF launch. He said the following at that time:

“By year-end, I'm confident the new highs will be in.”

His bullish thesis was based on Ethereum ETFs eventually capturing inflows after a choppy start. So, why are Ethereum ETFs, unlike Bitcoin ETFs, unable to attract institutions?

Click here to learn all about investing in Bitcoin.

The Disappointing Performance of ETH ETF: What's Behind It?

It was late in July that the U.S. Securities and Exchange Commission (SEC) allowed the first spot