Here’s why Ethereum and Bitcoin may be decoupling from each other
Ethereum and Bitcoin are going off in interesting directions right now.
Ethereum [ETH] seems to be holding up better than Bitcoin [BTC] these days. While BTC has seen more sell-pressure in the near term, ETH has been comparatively stable.
Here’s the rundown.
Ethereum staking hits records, reduces liquid supply
Ethereum’s supply on the open market has shrunk lately because staking rates hit a new all-time high. Around 40 million ETH are now locked up, up from roughly 18 million in 2021.
For context, about one-third of the total supply is no longer readily available for trading.
Additional data indicated that netflows were slightly negative at press time, with the reserve ratio at near neutral levels; no clear rush to sell.
With fewer tokens at the ready, near-term sell pressure tends to ease. This can help Ethereum stay resilient during times of chaos.
Bitcoin faces more sell-pressure now
On the other side, Bitcoin data revealed positive netflows and a rising reserve ratio. A larger amount of Bitcoin has been moving onto Binance lately, relative to existing exchange reserves.
What this implied is that more Bitcoin is becoming available for sale.
These inflows have picked up alongside the crypto’s recent price recovery, following the Iran-U.S ceasefire news. Some investors may use the rally as an exit opportunity, thus increasing the sell possibility.
So, while ETH’s liquid supply reduces, Bitcoin is facing higher near-term sell pressure.
BTC and ETH no longer in lockstep…
… and this clear divergence could have implications for the market.
At press time, Ethereum appeared to be better placed to absorb volatility, while also leading the altcoin space. By extension, there’s a possibility that other major altcoins could see less immediate downside pressure as well.
In effect, capital may not flow evenly across crypto assets. Instead, some of it may be rotating away from Bitcoin-led trades and into Ethereum and selected altcoins.
We could be in the early stages of a decoupling trend.
Final Summary
- Ethereum’s 40M staked ETH supply is reducing immediate sell pressure.
- However, BTC is at higher risk of selling, and may even decouple from ETH and other altcoins.
