PANews reported on May 2 that digital asset derivatives company Two Prime announced that despite its success in ETH, it will focus on BTC asset management and lending in the future. ETH's statistical trading behavior, value proposition, and community culture have failed to the point where it is not worth participating. With BTC as an alternative, ETH's risk-return is simply not reasonable.
Two Prime claims that as an algorithmic trading company, it values data rather than narrative. The data shows that ETH has changed fundamentally. Its correlation with BTC has decreased, and the tail risk has increased significantly. Now, its trading style is more like a meme coin than a predictable asset. Even during the turbulent period in the first quarter of 2025, Bitcoin maintained its fundamental trend, while ETH experienced multiple multi-standard deviation fluctuations. This stems from the risk-averse environment and the widespread selling of long-term ETH holders. This is troublesome for both algorithmic trading and ETH-backed lending, because the performance of the asset is no longer predictable, even taking into account the high volatility expectations in the digital asset market.
Two Prime said that in the past 15 months, Two Prime Lending has become the world's second-largest BTC and ETH mortgage lender, having completed more than $1.5 billion in loans. The company has been trading and lending in these two assets because they are the only two assets with sufficient liquidity for institutions to participate.
