Bitcoin favored over ether among traders in thin liquidity

As bitcoin (BTC) solidifies its dominance over its main rival ether (ETH), traders are showing a clear preference, despite the crypto market witnessing its most prolonged liquidity crisis in years. 

Data from market intelligence firms Glassnode and K33 show the crisis, echoing patterns seen during the 2014-15 and 2018-19 bear markets, has persisted for over 535 days. 

One significant date for market observers is on Friday when the US Securities and Exchange Commission is poised to make its decision to appeal the recent Grayscale court ruling linked to its spot BTC ETF application. 

An absence of an SEC appeal could spark a market reaction, though its longevity remains in question, K33 said in a recent note. 

Bitcoin’s continued appeal seems rooted in its role as “digital gold” in risk-averse scenarios and rising anticipation surrounding the potential rollout of spot bitcoin ETFs, the market intelligence firm added.

Elsewhere, derivatives markets are revealing subtle shifts. 

CME’s next month premium and BTC perpetuals’ offshore funding rates have both seen an uptick, suggesting cautious optimism, K33 alluded.

However, with offshore funding rates still lingering below the neutral mark and continued outflows from BTC ETFs, the market, despite its optimism, seems hesitant to expect further price rises, K33 said.

Even as ether trails behind, bitcoin’s steadfast position as traders’ preferred digital asset highlights its impressive year-long trajectory, boasting a rise of over 63% this year. The world’s second-largest digital asset, meanwhile, is up just half that amount at 30% to $1,560, Blockworks data shows.

Analysis points to the Realized Cap data — which underscores the dormant nature of coins transferred on-chain — suggesting very few coins transferred on-chain are being used to take profit or minimize losses, Glassnode said in a blog post on Monday.

“Liquidity continues to dry up across the digital assets as network settlement, Exchange interaction and capital flows reside at cycle lows, heavily underscoring the current acute apathy experienced by the market,” it said.

---

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
• Empire: Start your morning with the top news and analysis to inform your day in crypto.
• Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
• 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
• Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
• The Drop: For crypto collectors and traders, covering apps, games, memes and more.