The approval of both spot Bitcoin and Ethereum ETFs in the United States was hailed as a major turning point for the mainstream adoption of digital assets and web3 space. However, a few months down the line it is evident that Wall Street funds are more interested in Bitcoin than Ethereum on a larger scale.
While Bitcoin has succeeded in selling the narrative of digital gold, Ethereum continues to face fierce competition in the smart contract development space. Moreover, more layer one blockchains – led by Solana (SOL), BNB Chain, Tron (TRX), and Toncoin (TON), among others – have been competing for the same market with Ethereum.
Correlation Between Spot ETFs and Market Performances
According to a market analysis conducted by Glassnode, the magnitude difference in cash flow between spot Bitcoin ETFs and spot Ether ETFs remains huge. In August, the U.S. spot Bitcoin ETFs registered a net cash outflow of about $107 million per week, compared to an outflow of around $-13 million for the spot Ether ETFs.
“The relative influence of ETFs on the Ethereum market is equivalent to a range of ±1 percent of the spot volume, compared to ±8 percent for the Bitcoin ETF. This suggests that despite normalization, the appetite for the Bitcoin ETF remains an order of magnitude larger than its Ethereum counterpart,” Glassnode highlighted.
Midterm Expectations
Despite the recent net cash outflow from the US spot Ethereum and Bitcoin ETFs, the narrative is expected to shift once the Fed initiates its interest rate cut on September 18. Furthermore, investors will have access to more funds at lower interest rates, thus increasing their overall purchasing power.
With Ethereum price expected to outshine Bitcoin performance by the end of the 2024/2025 crypto bull run, Wall Street investors could significantly favor the former over the latter in spot ETF investments.
Already, Bitcoin’s dominance against the altcoin industry has been forming a potential macro reversal pattern, signaling the onset of the much-anticipated altseason on the horizon.
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