Ethereum has underperformed Bitcoin during the current market downturn, as it did during the crypto bear market in 2018, Morgan Stanley said in a report Monday. Dollar liquidity is being withdrawn from the market, while expectations of a Fed rate hike are affecting the cryptocurrency market, the report said.
Analysts led by Sheena Shah wrote that ETH has fallen about 75% from its November peak. “When ETH/BTC falls, it’s a sign that broader crypto enthusiasm is waning” as funds are withdrawing from the more volatile ETH. While ether’s price cycle in dollar terms is similar to 2018, analysts note that this time around, it’s mostly institutional investors driving the sell-off.
In 2018, retail trading activity accounted for a higher proportion. The bank said the cryptocurrency’s “quantitative tightening” continued, pushing bitcoin below $28,000, an important technical level.
Investors who bought bitcoin last year are now in the red, with no clear technical levels to observe before the 2017 high of $19,500, the report added.
For stablecoins, “issuance is shrinking rapidly,” according to the report, which has led to a halving of leverage in the “decentralized crypto ecosystem” since early May and caused crypto derivatives prices to drift away from their underlying assets, leading to Its not stable.