Ether’s performance year-to-date has been significantly worse than that of gold and silver, which are typically viewed as much more conservative investments.
Year-to-date, ETH has risen just 5.2% from $2,350 to $2,463, a modest gain compared to gold’s 25.9% and silver’s 23.9% gains, data from TradingView shows.
Gold prices reached an all-time high of $2,531 in August, before settling under $2,500 at the time of writing, while silver prices jumped to a more than 11-year high of $32.50 in May, before slipping to $28.20 now, per TradingView.
“Gold prices have continued to hit fresh highs in 2024 due to a wide range of factors — from escalating geopolitical risks and the interest rate outlook to budget deficit concerns, inflation hedging, and central bank buying,” stated a J.P. Morgan research note published on July 15.
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Gregory Shearer, head of base and precious metals strategy at J.P. Morgan, said in the report, “Amid fraying geopolitics, increased sanctioning and de-dollarization, we observe an increased appetite to buy real assets including gold.”
Moreover, according to the Silver Institute in an April report, underpinning the increase in silver’s price has been how the precious metal has had more demand than supply. “Total silver supply should decrease modestly by 1 percent. As a result, this year, we will also see another large deficit for silver, amounting to a projected 215.3 Moz [millions of ounces], the second-largest market deficit in more than 20 years,” the report stated.
Earlier in the year, ETH’s returns were significantly greater than those for gold and silver. ETH’s price climbed about 72% to a two-year high of more than $4,000 in March, when the network completed its Dencun upgrade, while gold and silver prices appreciated less than 10% over that time period. Since then, however, ETH prices have fallen significantly.
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According to Kelly Ye, a portfolio manager for liquid venture firm Decentral Park Capital, a host of events have limited the gains of crypto markets, while ETH’s performance specifically has been hampered by the lukewarm performance of the new spot ETH ETFs that launched in July.The broader events affecting crypto prices in general include l reduced expectations for rate cuts in Q2, geopolitical tensions, uncertainty over who will become the next U.S. president, and selling pressure from various entities such as the German government and failed crypto exchange Mt. Gox, the latter of which began paying back roughly $9 billion worth of tokens to its creditors in July.
“ETH has been particularly impacted [by these factors], with its ETF launch generating much less trading volume and inflow compared to [the spot] BTC ETF, and its onchain activity growth activity lagging behind competitors like SOL and TON,” Ye wrote in a Telegram message to Unchained.
Excluding Grayscale’s Ethereum Trust (ETHE), which has seen large outflows because of its high fees, spot ETH funds have had a cumulative net inflow of roughly $2.1 billion, compared to the $37.2 billion taken in by spot BTC ETFs, excluding Grayscale’s spot bitcoin ETF, which also saw large outflows.
ETH’s current market cap is $294.3 billion, while gold and silver are estimated to be valued at about $17 trillion and $1.6 trillion, respectively.
