The recent plunge in Bitcoin prices, which fell from approximately $107,000 on November 11 to around $81,000 by November 21, has sent shockwaves across the cryptocurrency market. However, emerging on-chain data indicates that this downturn was primarily a result of panic selling in Bitcoin, rather than a significant collapse of Ethereum.
An analysis from XWIN Research Japan highlights how the correction from October to November affected these two leading cryptocurrencies differently. While Bitcoin experienced a drop into the low-$70,000 range, Ethereum only retreated into the high-$60,000 area. Historically, a 30% decline in Bitcoin typically triggers a 40-50% drop in Ethereum, but this time the losses were disproportionately smaller for Ethereum, suggesting its stability amidst the chaos.
The underlying reason for Ethereum”s resilience lies in its supply mechanics. Following the Merge, a growing portion of ETH is locked in staking, coupled with the effects of EIP-1559, which systematically reduces the circulating supply during periods of high activity. This structural change means there are fewer tokens available for panic-driven sell-offs.
In contrast, the liquidation of Bitcoin positions surged on November 21, aligning with reports that nearly $2 billion in positions were erased in a single day. As Bitcoin”s price briefly dipped toward $81,000 before rebounding, it later climbed back above $84,000, eventually stabilizing around $86,000. This marks a 10% decrease over the week and 19% over the past two weeks.
On the other hand, Ethereum is now trading near $2,800, reflecting a decline of 12% over the week and 22% over the last 14 days. Although these figures are painful, they do not represent the severe damage seen in previous market cycles.
Despite Ethereum”s relatively calm performance in the spot market, analysts caution that an alarming build-up in derivatives could pose risks. According to CryptoOnchain, the leverage ratio for Ethereum on Binance has surged to a record 0.562, indicating that traders have been increasing their leveraged positions even as prices fell. This trend could lead to further liquidations if Ethereum experiences another downturn.
Current market conditions have been referred to as a “Zebra Market” by XWIN Research, characterized by stark price fluctuations rather than sustained trends. In this unpredictable environment, on-chain metrics play a crucial role in discerning valuable insights from market noise. For now, the prevailing data suggests that the recent market turmoil was primarily a Bitcoin-induced event, with Ethereum managing to withstand the storm.
