Role Reversal: Ethereum Defies Expectations With Lower Volatility Than Bitcoin
23 May 2023 - 1:20AM
NEWSBTC
Ethereum (ETH), the second-largest digital asset in the
cryptocurrency sector, is currently captivating traders’ attention
as volatility gauges indicate an intriguing shift in market
dynamics. Contrary to the customary pattern, these indicators
are suggesting that Ether may experience relatively smaller
near-term price fluctuations compared to Bitcoin, according to
Bloomberg. This unexpected reversal has injected a fresh element of
anticipation and curiosity among investors, who are now closely
monitoring the evolving landscape of cryptocurrencies.
Related Reading: Shiba Inu Struggles To Initiate A Breakout: Will
It Defy Resistance And Rebound? The Bitcoin Volatility Index.
Source: T3 Index. Narrowing Gap Between Ethereum And Bitcoin
Volatility The T3 Ether Volatility Index, an innovative tool, lies
at the core of this phenomenon. It has emerged as an indispensable
barometer for assessing and foreseeing price volatility in the
Ether market. The data compiled by Bloomberg reveals that the
difference in volatility between Ether and Bitcoin, as measured by
the 180-day realized or historical volatility, is currently at its
smallest since 2020. Furthermore, this difference is only
marginally positive, indicating a remarkably close alignment
between the volatility of Ether and Bitcoin. The Ether Volatility
Index. Source: T3 Index. Caroline Mauron, co-founder of
crypto derivatives platform OrBit Markets, told the publication:
“Lower volatility typically helps institutional investors to
allocate more capital to crypto, as it becomes cheaper to buy
protection and manage exposures… the volatility spread compression
may drive more exposure to Ether from long-term investors.”
Implications Of Ethereum Price Fluctuation The changing flux of
Ether’s volatility behavior have significant implications. Notably,
the Bitcoin and Ether implied volatility indexes, which rely on
options pricing, have experienced declines after reaching recent
highs in March. However, Ether’s implied volatility has
decreased at a faster pace. Additionally, a broader measurement of
cross-asset fluctuations in global markets has also witnessed a
decline. The implications of Ether’s changing volatility behavior
are multifaceted. The faster decline in Ether’s implied volatility
suggests that market participants have become less uncertain or
less anxious about the future price movements of Ether compared to
Bitcoin. This could be influenced by various factors such as
regulatory developments, market maturity, or growing investor
confidence in Ether’s long-term potential. ETHUSD trading at
$1,812. Chart: TradingView.com Related Reading: Ethereum Whale
Resurfaces After 2-Year Hiatus, Stakes $7.4 Million In ETH
Furthermore, the broader decrease in cross-asset swings indicates a
potential reduction in risk aversion among investors, as they
perceive a more stable and predictable market environment. This
could impact investment decisions and trading strategies, as market
participants may adjust their risk management approaches and
allocation of resources based on the evolving volatility landscape.
The changing volatility of Ether, as reflected in the Bitcoin and
Ether implied volatility indexes and the broader measure of
cross-asset swings, highlight the evolving nature of the
cryptocurrency market. -Featured image from Coinnounce
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