Most large-cap cryptocurrencies, including Bitcoin and Ethereum, haven’t exactly lived as much as the hype and promise within the second half of 2024. Investors saw the final market experience a negative begin to the past week, with most assets shedding a significant slice of their value.

Interestingly, this recent price motion has offered a singular insight into the present state of the crypto market and its relationship with the macro capital markets.

Spot Bitcoin ETFs Vs. Ethereum ETFs — Relative Impact?

In a recent report, trading firm QCP Capital shared their statement on the Bitcoin and Ethereum markets following the numerous drawdown on Monday, August 5. Based on the firm, there was a fundamental change within the liquidity profile of ETH relative to BTC, the biggest cryptocurrency by market cap.

Based on QCP Capital, Bitcoin is becoming increasingly incorporated into the mainstream capital markets, including the stock and bond markets. However, Ethereum — the second-largest cryptocurrency — is being pushed to the sidelines.

This liquidity shift was further spotlighted within the broad market downturn experienced on Monday, where BTC fell by only 16% in comparison with ETH’s 22% price decline. Furthermore, Bitcoin’s price is sort of around where it was every week ago — closing in on $61,000, while ETH continues to be a bit of off pace.

QCP Capital noted that this trend appears to result from the “distinct lack of interest” within the recently launched spot Ethereum exchange-traded funds (ETFs) relative to their BTC counterparts. “BTC as digital gold is a compelling narrative to investors while ETH is lacking one,” the firm said.

This lack of a selling point for Ethereum — especially amongst the older generations — was one among the talking points following the ETH ETF approval. Interestingly, the slow start of those funds may give some credence to the early concerns.

Liquidity Shift Not Necessarily A Bad Thing: QCP

There continues to be some upside for Ethereum despite not penetrating the standard markets as potently as Bitcoin, in response to QCP Capital. The trading firm added:

As a more speculative and more volatile asset, the propensity for exponential price gains comes together with the potential for larger drawdowns. 

QCP revealed that the difference within the implied volatility between BTC and ETH was closer to five% prior to the launch of the spot Ethereum ETFs. Nevertheless, this difference has now grown to greater than 20% for the reason that exchange-traded funds made their debut.

As of this writing, the value of Ethereum is hovering around $2,600 while Bitcoin looks to carry above $61,000.