Ethereum Hit With Fresh Blow Amid Price Decline While Bitcoin Gains Ground

A major shift has occurred in the crypto investment space as Two Prime, a US-based investment advisory firm, has decided to abandon Ethereum (ETH) in favor of an exclusive focus on Bitcoin (BTC). This move follows ETH’s significant price decline in early 2025, which prompted the firm to reassess its strategy. From Dual Lending to Bitcoin-Only Over the past 15 months, Two Prime facilitated $1.5 billion in loans using both Bitcoin and Ether. However, citing Ethereum’s instability and underwhelming performance, the firm announced on May 1 that it would now concentrate entirely on Bitcoin for both asset management and lending operations. “ETH’s statistical trading behavior, value proposition, and community culture have failed beyond a point that is worth engaging,” Two Prime stated, signaling a complete pivot. ETH’s Unpredictability a Major Concern A key reason behind the firm’s decision is what it describes as Ethereum’s loss of predictable trading behavior. As an algorithmic trading firm, Two Prime emphasizes the importance of consistent data patterns for its models. “Ether no longer trades predictably,” the firm said. “As an algorithmic trading firm, we value data more than narratives… the data suggests ETH has fundamentally changed.” The firm explained that Ether has decoupled from Bitcoin and now behaves more like a memecoin. They noted ETH experienced “several multi-standard deviation moves” during Q1 2025, in contrast to Bitcoin’s relatively steady behavior. “It trades now like a memecoin rather than a predictable asset,” the company added. “Even during the turbulence of Q1 2025, Bitcoin remained within its fundamental behavior, whereas ETH saw several multi-standard deviation moves.” Impact on Algorithmic Trading and Lending Such volatility poses serious challenges for firms like Two Prime that rely on quantitative strategies. The unpredictability of ETH’s price action not only complicates trading but also undermines ETH-backed lending practices, which rely on certain levels of price stability. The firm remarked that ETH’s behavior creates a “headache” for algorithmic trading and undermines lending reliability, “even by the high volatility expectations of digital asset markets.” Criticism Triggers Community Reaction Two Prime’s harsh assessment of Ethereum didn’t go unnoticed. Some crypto enthusiasts saw the firm’s exit as a contrarian indicator — a possible sign that ETH is nearing a price bottom. One user commented, “What a retarded essay statement,” referencing the S&P 500’s own 4.7% decline year-to-date. Others questioned Two Prime’s relevance altogether: “Never even heard of them. Seems irrelevant.” “If this isn’t a bottom signal for ETH idk what is,” another person noted, suggesting that the worst might be over for Ethereum. Weak ETH ETF Performance Adds Pressure Adding to ETH’s woes, Two Prime pointed to the underwhelming performance of Ethereum-based ETFs. While Bitcoin ETFs have attracted substantial institutional investment, ETH ETFs have lagged far behind, with BTC ETF purchases outpacing ETH by nearly 24 times. “The failure of ETH’s ETF creates a reflexive loop whereby institutions like BlackRock dedicate fewer resources to their promotion and sale. BTC has found the mainstream while ETH has floundered,” Two Prime stated. Despite this, Ethereum still dominates among altcoin ETFs in terms of assets under management (AUM). Recent data shows Ether-based exchange-traded products hold $9.2 billion in AUM, well ahead of Solana and XRP, which have $1.4 billion and $1 billion, respectively. ETF Landscape Adds to ETH Struggles Following the US SEC’s approval of spot Ether ETFs in May 2024, the asset saw a muted reception. Investor enthusiasm has waned, and some issuers have backed away — VanEck halted Ether futures ETF trading, WisdomTree withdrew its proposal, and ARK dissolved its futures ETFs for both Bitcoin and Ether in March 2025. Founded in 2019 by Alexander Blum and Marc Fleury, Two Prime had been active in both Bitcoin and Ethereum lending until this dramatic pivot. Whether their exit marks a low point for ETH or simply reflects a broader trend remains to be seen.

Source: CryptoIntelligence