- Ethereum’s correlation with Bitcoin reached a yearly low of 0.61.
- Moderate Ethereum spot trading volume and waning interest in whales contrasted with Bitcoin’s resurgence.
Amid the ever-fluctuating cryptocurrency landscape, Ethereum[ETH] seemed to face continued challenges, unlike Bitcoin’s recent resurgence.
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The disconnect
Recent data indicated a correlation coefficient of 0.61 between Bitcoin and Ethereum, marking one of the lowest levels this year. This suggested that Ethereum was not closely mirroring Bitcoin’s recent positive price movements.
Source: trading view
A crucial factor contributing to Ethereum’s lackluster performance was the ongoing bear market conditions. Historically, traders have tended to favor Bitcoin during bear markets, Kaiko’s data shows.
Furthermore, Ethereum’s spot trading volume has also shown a consistent lack of momentum over the past two months, with occasional spikes barely crossing the $2 billion mark.
Another major trend was the declining interest of cryptocurrency whales in Ethereum. Data from Glassnode showed a notable decline in the number of addresses holding 10,000 or more Ethereum coins, hitting a two-year low of just 1,074 such addresses.
📉 #Ethereum $ETH The number of addresses holding more than 10,000 coins just reached a two-year low of 1,074
View statistics:https://t.co/paW9ojeWBw pic.twitter.com/hWSRRtnvuJ
— Glassnode Alerts (@glassnodealerts) October 5, 2023
Traders and ETFs
Additionally, the Ethereum perpetual futures market has seen a rise in open interest since early September. However, financing rates remained largely neutral to negative. This phenomenon reflected the ambiguity of the market and contributed to Ethereum’s prevailing uncertainty.
Source: Kaiko
Added to the mix were the recent developments surrounding Ethereum-based Exchange Traded Funds (ETFs). Six futures-based Ethereum ETFs made their debut on the US markets, aiming to provide investors with exposure to the cryptocurrency.
However, unlike Bitcoin’s successful ETF, ProShares Bitcoin Strategy (BITO), which recorded over $1 billion in trading volume on its first day, Ethereum ETFs have struggled to attract meaningful trading volumes.
VanEck’s EFUT and ProShares EETH, the two largest ETFs, recorded average daily trading volume of just $0.5 million during their first week of trading.
Realistic or not, here is the market cap of ETH in BTC terms
Several factors are contributing to this muted response, including the current market environment characterized by rising risk-free interest rates and macroeconomic uncertainty.
The trading price of ETH at the time of writing was $1,581. It noted a decline in both the MVRV ratio and price over the past month. However, the metric that measures transaction frequency, known as speed, showed a slight increase over the same period.
Source: Santiment