Ethereum Will Continue Losing Ground To Bitcoin: Glassnode

The price of Ethereum (ETH) has continuously lost ground to that of its older brother, Bitcoin (BTC), throughout the year – and on-chain data suggests it will continue to do so.

As of Thursday, Bitcoin’s market cap dominance stood at 53.3%, versus Ethereum’s 16.7%. A day prior, the ETH/BTC price ratio briefly fell below 0.05, its lowest value since April 2021.

According to lead on-chain Glassnode analyst James Check, various other measures of market dominance between both top cryptocurrencies paint “a case for continuation, not reversal” of Ethereum’s waning relative interest.

“Across both futures and options derivatives markets, Bitcoin dominance continues to grow relative to Ethereum, pushing well above 60% and now into 70% territory,” he explained in an X thread on Wednesday.

If history is any guide, the decline in market cap ratio between $ETH and $BTC may only be half-way…

Below is a 🧵 covering a few different measures of market dominance between #Bitcoin and #Ethereum, which paints a case for continuation, not reversal.https://t.co/RiPVkb7zoF pic.twitter.com/x0Wa1tldmm

— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) December 20, 2023

While volume in perpetual futures contracts for each asset reached parity 12 months ago, volume has since diverged into a 70/30 split in Bitcoin’s favor.

Much the same can be said of both options volume and open interest, which have slowly moved towards Bitcoin since the start of the year.

Check also noted that ETH still appears “quite overvalued” next to BTC by realized cap – the market cap of ETH based on the price at which all coins were last moved.

For this to change, long-term ETH holders will need to sell their coins at a loss, and Bitcoin capital inflows will need to exceed Ethereum. “The capital rotation by this metric appears to be early in the trend,” said Check.

Over the past month, the 30-day change in realized cap shows less capital flowing into Ethereum ($6 billion) versus Bitcoin ($13.8 billion) or even stablecoins, which are viewed as a proxy for the broader altcoin market.

Finally, Bitcoin is dominant when it comes to spot trading volume, dominating 75% of exchange flows between the two assets.

“Bitcoin trading activity always moves first, often dominating beyond new market ATHs before ETH sees much of an activity pickup,” concluded Check. “The king remains the king.”

BTC is now up 162% year to date, while ETH is up 82%. Even rival altcoins like Solana (SOL) and Cardano (ADA) are dwarfing gains made by crypto’s number 2 this year, both rising 77% and 69% respectively over the past month alone, versus ETH’s 13%.

Even Vitalik Buterin, the founder of Ethereum, was found moving $1 million of his ETH holdings to an exchange earlier this month.

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