Ethereum (ETH) lags behind Bitcoin’s gains in 2024, but analysts at Glassnode suggest its future is bright.

Why is ETH Underperforming?

Data shows Ethereum has underperformed Bitcoin in the past two years, with a declining ETH/BTC ratio. Glassnode attributes this to weaker investor interest in ETH compared to Bitcoin. Notably, short-term holders (those who acquired ETH in the last 155 days) haven’t piled into the asset like they did with Bitcoin in the lead-up to its all-time high.

On-Chain Data Paints a Different Picture

While Bitcoin’s price action is influencing Ethereum currently, on-chain data suggests a potential future surge for ETH. Here’s why:

• Early Stages of a Bull Run: Despite the recent correction, both Bitcoin and Ethereum’s Net Unrealized Profit/Loss (NUPL) metric indicates the market is still in the early stages of a bull run, with low unrealized profit/loss among long-term holders.
• Ethereum’s Potential to Outperform: Historically, capital inflows into ETH tend to lag behind Bitcoin. This suggests investors might be waiting for a better entry point before accumulating ETH.

Grayscale Withdraws Ether Futures ETF Application

In a surprising move, Grayscale withdrew its application for an Ether futures ETF just weeks before the SEC’s decision deadline. The reason behind this withdrawal remains unclear, especially considering the upcoming decisions on several spot Ether ETF applications.

SEC Considers Spot Ether ETFs

The SEC is scheduled to make decisions on several spot Ether ETF applications by the end of May. The outcome of these decisions will significantly impact the Ethereum market.

Legal Challenges to Ethereum’s Classification

The upcoming oral arguments on July 18th will address a lawsuit filed by Hodl Law challenging the SEC’s stance on Ethereum’s classification as a security. The outcome of this case could influence regulations surrounding Ethereum and other cryptocurrencies.

Overall, while Ethereum’s current price performance is lackluster compared to Bitcoin, on-chain data suggests it might be poised for future growth. Regulatory developments regarding Ether ETFs and its classification as a security are worth monitoring as they could significantly impact the Ethereum market.