Crypto investor exodus weighs heavier on Bitcoin also-ran Ether
Both crypto tokens have seen billions in outflows from their ETFs since the early October crash
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[NEW YORK] Ethereum was promoted as Bitcoin 2.0 by many early advocates because the programmable aspects of the blockchain network allowed users to do more than just make peer-to-peer payments. It also led to scores of predictions that the Ether token would surpass Bitcoin in overall value.
More than a decade later, the long-forecast “flippening” in market value has failed to materialise, with Ether becoming an eternal also-ran to Bitcoin. One consequence is that Ether has tended to do worse than Bitcoin during periods such as during the current market downturn because of lower liquidity.
Ether has stumbled almost 60 per cent since its peak in August, while Bitcoin is down roughly 45 per cent from its all-time high reached in early October. On Tuesday (Feb 10), Ether slumped as much as 6.2 per cent to US$1,989. Bitcoin was off as much as 3.5 per cent to US$67,878. Bitcoin’s percentage of the US$2.35 trillion value of the digital asset market holds steady at around 60 per cent, while Ether has dropped to about 10 per cent.
Ether’s “high volatility can be easily explained by lower capitalisation and lower institutional involvement”, said Alex Kuptsikevich, chief market analyst at FxPro. “Coins ranked in the second 10 or second hundred by capitalisation not only make wider movements but also often fall out of the market’s focus, permanently moving away from their historical peaks.”
Bitcoin had nearly touched US$60,000 on Friday before rebounding. The token is coming off a particularly bruising week that saw it erase all of its gains since US President Donald Trump was reelected at the end of 2024. While the crypto-friendly administration has been seen as a boon for the industry, Bitcoin recently reached its longest monthly losing streak since 2018.
“Bitcoin is trading just below US$70,000 in a cryptocurrency market that appears to be still looking for a clear sense of direction as the shock waves from last week’s sell-off continue to reverberate,” said Petr Kozyakov, co-founder and chief executive at Mercuryo. “This has left crypto market analysts trying to read the tea leaves for signs of where the market may be heading in the near term.”
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Bitcoin hoarders are among those feeling the pressure. Last week, Michael Saylor’s Strategy reported a net loss of US$12.4 billion for the fourth quarter. Appearing on CNBC on Tuesday, Saylor said concerns that falling Bitcoin prices might force the company to sell its holdings were “unfounded”, adding that the firm intends to buy Bitcoin every quarter.
“We are not selling our Bitcoin,” Strategy chief executive officer Phong Le reiterated later Tuesday at the Bitcoin Investor Week conference in New York. “If Bitcoin trades down to US$8,000 for five years straight, we might need to sell our Bitcoin.”
Despite bouncing back from last week’s lows, markets are showing little risk appetite for the two largest cryptocurrencies. Bearish signals still plague Bitcoin derivatives. Funding rates for Bitcoin perpetual futures have remained below zero, signalling that traders remain positioned for downward pressure.
“Funding rates are heavily negative right now and sentiment on the lesser known names is generally really bad,” said Adam McCarthy, a research analyst at Kaiko.
Both crypto tokens have seen billions in outflows from their exchange-traded funds (ETFs) since the early October crash. Investors have pulled US$3.2 billion from Ether ETFs, with US$462 million withdrawn just this year. Bitcoin ETFs, meanwhile, have seen US$7.9 billion in outflows in the same period, with US$1.8 billion of that pulled this year.
“ETH remains in a bearish structure overall after breaking down from the US$2,800 to US$3,000 range,” said Rachael Lucas, an analyst at BTC Markets. The sell-off comes on the back of macro risk-off sentiment and a broader crypto sell-off, she added. BLOOMBERG
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