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Morgan Stanley Says Ether Underperformance Echoes Crypto Downturn of 2018
Expectations of higher Fed interest rates are weighing on crypto prices, the bank's analysts said.
Par Will Canny
The largest altcoin, ether (ETH), is underperforming bitcoin (BTC), just as it did during the downturn in crypto markets in 2018, Morgan Stanley (MS) said in a report Monday.
U.S. dollar liquidity is being withdrawn from markets and expectations of higher Federal Reserve interest rates are hurting crypto prices, the report says.
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Ether, the second-largest cryptocurrency, has dropped about 75% from its November peak, analysts led by Sheena Shah wrote.
“When the ETH/BTC relative cross falls, it is a sign that the broader crypto enthusiasm is waning” as money is being pulled out of the more volatile alternative coins, the note says.
Although ether’s price cycle in U.S. dollar terms is similar to 2018, the analysts noted that this time round it’s largely institutional investors driving sales. In 2018, the share of retail trading activity was much higher.
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The crypto-equivalent of quantitative tightening has continued, the bank said, fueling BTC’s slide to below $28,000, an important technical level. Any investors who bought BTC in the last year are now at a loss, and there are no obvious technical levels to watch until about $19,500, the 2017 high, it added.
For stablecoins, “issuance is contracting quickly,” the report says, and that has contributed to leverage halving within the “decentralized crypto ecosystem” since the beginning of May, and the destabilizing of crypto derivative prices as they diverge from their underlying assets.
Read more: Morgan Stanley Sees Crypto Equivalent of Quantitative Tightening
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Exchange Review - March 2025
CoinDesk Data's monthly Exchange Review captures the key developments within the cryptocurrency exchange market. The report includes analyses that relate to exchange volumes, crypto derivatives trading, market segmentation by fees, fiat trading, and more.
What to know:
Trading activity softened in March as market uncertainty grew amid escalating tariff tensions between the U.S. and global trading partners. Centralized exchanges recorded their lowest combined trading volume since October, declining 6.24% to $6.79tn. This marked the third consecutive monthly decline across both market segments, with spot trading volume falling 14.1% to $1.98tn and derivatives trading slipping 2.56% to $4.81tn.
- Trading Volumes Decline for Third Consecutive Month: Combined spot and derivatives trading volume on centralized exchanges fell by 6.24% to $6.79tn in March 2025, reaching the lowest level since October. Both spot and derivatives markets recorded their third consecutive monthly decline, falling 14.1% and 2.56% to $1.98tn and $4.81tn respectively.
- Institutional Crypto Trading Volume on CME Falls 23.5%: In March, total derivatives trading volume on the CME exchange fell by 23.5% to $175bn, the lowest monthly volume since October 2024. CME's market share among derivatives exchanges dropped from 4.63% to 3.64%, suggesting declining institutional interest amid current macroeconomic conditions.
- Bybit Spot Market Share Slides in March: Spot trading volume on Bybit fell by 52.1% to $81.1bn in March, coinciding with decreased trading activity following the hack of the exchange's cold wallets in February. Bybit's spot market share dropped from 7.35% to 4.10%, its lowest since July 2023.
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What to know:
- Ethena's USDe becomes fifth stablecoin to surpass $10 billion market cap in just 609 days, while Tether's dominance continues to slip.
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