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The two largest cryptocurrencies, Bitcoin and Ethereum, are moving in opposite directions, creating confusion among investors. According to data from CoinGecko, Ethereum (ETH) fell 7% last week to $2,525, while Bitcoin (BTC) remained relatively stable at $68,957.
This divergence is notable because Bitcoin and Ethereum typically rise and fall together. Ben Caselin, chief marketing officer at crypto exchange VALR, explained that while Ethereum has outperformed Bitcoin in previous cycles, this time the dynamic has changed.
Aside from the impressive rally of Solana (SOL), which has gained nearly 7% in the past week, Bitcoin’s resilience can be attributed to two key factors: flows into spot Bitcoin ETFs and the continued rise in memecoin popularity. This rally in BTC and Solana has further exacerbated the divergence trend that began after spot Ether ETFs went live in July.
Since the launch of spot Ethereum ETFs, the price of Ethereum has fallen by 36%, while Bitcoin has gained a modest 2%.
Despite the excitement surrounding long-awaited Ethereum ETFs, these financial products have struggled to gain the same level of traction as their Bitcoin counterparts. Data from SoSo Value shows that spot Ethereum ETFs have seen net outflows of over $504 million since July. In comparison, spot Bitcoin ETFs launched in January have seen inflows of around $22 billion.
“Regulators and traditional investors are showing more openness to BTC, but not ETH, at least not yet,” commented Shauli Rejwan, Managing Partner at Masterkey.VC.
Ethereum’s recent decline comes as other layer 1 protocols like Solana gain traction. Ben Caselin noted that there’s no guarantee that Ethereum will maintain its top spot in the long term, but he acknowledged that upcoming events like the US elections could create volatility, potentially benefiting the price of ETH in the short term. However, he warned that such events could also serve as an “exit liquidity” point for some investors.
But Rejwan remains cautiously optimistic, arguing that it’s too early to write off Ethereum. He said Wall Street’s interest in spot Ethereum ETFs could take six to 10 months to materialize, or perhaps accelerate if a bull run begins.
*This is not investment advice.