Most large-cap cryptocurrencies, including Bitcoin and Ethereum, failed to live up to expectations and promises in the second half of 2024. Investors noted that the overall market started the previous week on a negative note, with most assets losing a significant portion of their value.

Interestingly, recent price fluctuations have shed unique featherlight on the current state of the cryptocurrency market and its relationship with macroeconomic capital markets.

Spot Bitcoin ETF vs Ethereum ETF – Relative Impact?

In a recent report, trading firm QCP Capital common their observations on the Bitcoin and Ethereum markets following a significant decline on Monday, August 5. According to the firm, there has been a fundamental change in the liquidity profile of ETH relative to BTC, the largest cryptocurrency by market capitalization.

According to QCP Capital, Bitcoin is increasingly being integrated into mainstream capital markets, including stocks and bonds. On the other hand, Ethereum — the second-largest cryptocurrency — is being sidelined.

This change in liquidity was further highlighted by the overall market decline that occurred on Monday, with BTC down just 16% compared to ETH’s 22% decline. What’s more, Bitcoin is almost exactly where it was a week ago — closing at $61,000, while ETH is still slightly behind.

QCP Capital noted that this trend appears to be due to a “distinct lack of interest” in recently launched Ethereum spot ETFs (Exchange-Traded Funds) compared to their BTC counterparts. “BTC as digital gold is a compelling narrative for investors, while ETH lacks one,” the firm said.

This no point of sale for Ethereum — especially among older generations — was one of the topics of conversation following the approval of the ETH ETF. Interestingly, the leisurely start to these funds may give some cause for early concern.

Changing liquidity is not necessarily a bad thing: QCP

According to QCP Capital, Ethereum still has some growth potential, even though it has not penetrated conventional markets as effectively as Bitcoin. The trading firm added:

As a more speculative and volatile asset, the propensity for exponential price increases comes with the potential risk of larger declines.

QCP revealed that the difference in implied volatility between BTC and ETH was closer to 5% before the launch of the spot Ethereum ETF. However, this difference has increased to over 20% since the ETF debuted.

At the time of writing, Ethereum is trading at around $2,600, while Bitcoin is expected to stay above $61,000.