Two Prime Drops Ethereum, Cites 51% Decline, Focuses on Bitcoin
1min read Algorithmic trading firm Two Prime has made a significant shift in its cryptocurrency strategy, announcing that it will no longer hold any Ethereum (ETH) and will exclusively manage and lend against Bitcoin (BTC). The firm cited several reasons for this decision, including Ethereum's unpredictable behavior, declining market momentum, and eroding institutional appeal. Two Prime, an SEC-registered investment advisor, has lent over $1.5 billion against BTC and ETH in the past 15 months. However, the firm argued that the risk-reward profile of ETH has deteriorated to the point of being "unjustifiable."
Two Prime's statement was clear in its criticisms of ETH, describing its statistical trading behavior, value proposition, and community culture as having "failed beyond a point that is worth engaging." The firm compared ETH's current trading behavior to that of a "meme coin" rather than a predictable asset. This decision comes as Ethereum has experienced a 51% year-to-date decline, currently trading at approximately $1,833. In contrast, Bitcoin is trading near $97,000, having gained 2.7% since the start of the year and is about 11% off its all-time high.
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The firm also highlighted the market split between Ethereum and Bitcoin, noting that Ethereum's continued slump since the 2024 U.S. elections, contrasted with Bitcoin's rebound, exposed a divide too deep to ignore. Two Prime's CEO, Alexander Blume, stated, "Two Prime is done with ETH." This sentiment is echoed by traders on the Myriad prediction market, who point to an 82% likelihood that ETH will finish below $1,900 by Sunday night, indicating tepid confidence in Ethereum's short-term prospects.
Two Prime's decision is not solely based on market performance but also on the perceived direction and leadership of Ethereum. The firm criticized Ethereum's slow processes, mission creep, and lack of a clear monetization strategy. It also noted that Ethereum's Layer-2 solutions have cannibalized the mainnet's value, leaving it without a clear path forward. In contrast, Two Prime highlighted blockchains such as Solana as more compelling for developers and users, offering better speed, cost, and user experience.
Meanwhile, Bitcoin stands alone in its use case, offering predictability and scale that Ethereum can no longer match. Two Prime concluded that the issue for Ethereum and its leadership is that "everyone but them seems to know that." This shift in strategy by Two Prime reflects a broader sentiment in the cryptocurrency community about the future of Ethereum and its ability to compete with Bitcoin. The firm's decision to exit Ethereum entirely and focus on Bitcoin underscores the growing divide between the two leading cryptocurrencies and the challenges Ethereum faces in maintaining its institutional appeal.
