U.S. investment firm Two Prime exits Ethereum positions after 45% YTD plunge, comparing ETH’s volatility to speculative memecoins while shifting focus to Bitcoin amid institutional skepticism.
The $1.2 billion asset manager revealed its Ethereum divestment through a June 21 SEC filing, noting ETH’s 68% annualized volatility now rivals Dogecoin’s 72% while Bitcoin maintains 42% stability per CryptoCompare data.
Institutional Exodus Accelerates
Two Prime’s decision follows JPMorgan’s June 20 downgrade slashing Ethereum’s 2024 price target to $2,500, a 37% reduction from Q1 projections. The firm’s chief investment officer noted in a client memo seen by Reuters: ‘Ethereum’s staking yield compression and Layer-2 fragmentation created untenable risk profiles for regulated entities.’
ETF Delays Compound Pressures
SEC filings from June 24 reveal regulators postponed decisions on VanEck and Franklin Templeton’s Ethereum ETF applications to September 2024, demanding proof of ‘sufficient market depth to prevent manipulation.’ Bloomberg analysts now estimate ≤35% approval probability versus Bitcoin ETFs’ 98% January clearance rate.
Volatility Metrics Turn Alarming
Kaiko’s June 23 liquidity report shows 23% of Ethereum network activity involves memecoin trades, compared to Bitcoin’s 2% non-UTXO transactions. Ethereum’s 30-day annualized volatility hit 68% versus Bitcoin’s 42%, with weekend price swings doubling since Q1 according to CryptoCompare metrics.
Historical Precedents Emerge
The current ETH/BTC performance gap (-33% YTD) mirrors 2018’s ‘Crypto Winter’ patterns when Ethereum underperformed Bitcoin by 41% following the ICO collapse. However, the velocity of institutional exits surpasses previous cycles – Fidelity’s June 19 data shows 67% of surveyed firms now classify ETH as ‘high-risk,’ versus 52% in 2022.
Structural Shifts in Digital Asset Markets
DappRadar’s Q2 report reveals Ethereum decentralized application usage dropped 18% year-over-year, while Bitcoin Ordinals transactions grew 214%. This divergence challenges Ethereum’s ‘utility blockchain’ narrative as institutional players like Two Prime reallocate to Bitcoin’s macroeconomic hedge proposition.
Historical Context: Bitcoin’s ETF Crucible
Ethereum’s current regulatory challenges echo Bitcoin’s 2021 ETF approval process, when the SEC delayed decisions for 14 months before greenlighting futures-based products. However, Bitcoin’s volatility decreased 22% post-ETF launch according to Glassnode data – a stabilization outcome now in question for Ethereum.
Precedent: The ICO Boom and Bust Cycle
The 2017-2018 initial coin offering frenzy saw Ethereum’s price surge 13,000% before crashing 94% over 12 months. Current memecoin proliferation on Ethereum networks (23% of transactions per Kaiko) raises concerns about repeating this speculative pattern, albeit with institutional capital now at stake.
