Global markets are currently experiencing turmoil due to the impact of President Trump’s new “Liberation Day” tariffs and a sudden liquidity crunch. This has led to a significant correction in the crypto market, with Ethereum facing heavier losses compared to Bitcoin. So, why is ETH falling more than BTC? Let’s delve deeper into the reasons behind this disparity.
Markets Worldwide Are Under Pressure
In the past week, major markets across the globe have been under immense pressure. The US stock market has dropped by 0.68%, Europe by 4.65%, China by 3.28%, India by 3.53%, and Australia by 1.21%. This sell-off has also affected other major assets, including WTI crude oil prices, which have fallen by nearly 13.79%, and gold, which has decreased by 4.74% between April 3 and 7.
The cryptocurrency market has not been immune to this economic turmoil. In the last seven days, both Bitcoin and Ethereum have experienced declines of at least 1.1% and 11%, respectively. However, Ethereum seems to have been hit harder by the current market conditions.
Ethereum Sees Bigger Capital Outflows
Recent research indicates that Ethereum, which was once attracting capital inflows of +$15.5 billion per month, is now facing outflows of -$6 billion per month. On the other hand, Bitcoin’s inflows, although slowed, remain positive at +$6 billion per month. This suggests that investors have more confidence in Bitcoin than in Ethereum.
The Realised Cap chart comparing BTC and ETH also reveals a significant disparity. Since late 2022, Ethereum’s realised cap has grown by only 32%, from $183 billion to $244 billion, while Bitcoin’s realised cap has surged by 117%, from $402 billion to $870 billion. This indicates that Bitcoin has garnered much more investor demand than Ethereum in this cycle.
MVRV Ratio Shows ETH Holders Are in Loss
The MVRV (Market Value to Realised Value) ratio further highlights the underperformance of ETH. With ETH’s ratio dropping below 1.0, the average holder is now at a loss, while Bitcoin’s MVRV ratio remains above 1.0, indicating that most BTC holders are still in profit. This situation can lead to more selling pressure on Ethereum as investors seek to cut their losses.
BTC Has Outperformed ETH for Over 800 Days
Bitcoin has outperformed Ethereum for 812 consecutive days, with Bitcoin holders enjoying higher average profits than ETH holders during this period. This prolonged underperformance has eroded sentiment around Ethereum and reinforced Bitcoin’s position as the preferred investment choice.
ETH/BTC Pair Shows Ethereum Losing Ground
The ETH/BTC pair has plummeted by 75% since September 2022, with a further decline of 11.46% since the beginning of April. This continuous underperformance of Ethereum compared to Bitcoin in this cycle underscores the challenges facing Ethereum.
What’s Next: Can ETH Recover Its Momentum?
During the recent sell-off, Ethereum investors locked in $564 million in realised losses, more than double the $240 million in losses for Bitcoin holders. This disparity in losses highlights the greater pain felt by ETH investors. In previous bull markets, Ethereum would often outperform Bitcoin, but in this cycle, that trend has reversed, impacting investor confidence.
With capital outflows, weakening sentiment, and key metrics indicating deeper losses, Ethereum’s underperformance may persist unless a significant bullish shift occurs. Currently, the market seems to favor Bitcoin as the safer investment option.
As the crypto market continues to navigate through turbulent times, it is essential for investors to stay informed and adapt their strategies accordingly. Stay ahead with breaking news, expert analysis, and real-time updates on the latest trends in Bitcoin, altcoins, DeFi, NFTs, and more.