The Zhitong Finance APP has noticed that volatility indicators show that traders expect Ethereum's recent volatility to be smaller than Bitcoin, which is contrary to the usual pattern of the two major digital assets in the cryptocurrency field.The T3 Ethereum Volatility Index is an indicator of token 30 day implied volatility, which has lagged behind similar indicators of Bitcoin since at least 2021
The Zhitong Finance APP has noticed that volatility indicators show that traders expect Ethereum's recent volatility to be smaller than Bitcoin, which is contrary to the usual pattern of the two major digital assets in the cryptocurrency field.
The T3 Ethereum Volatility Index is an indicator of token 30 day implied volatility, which has lagged behind similar indicators of Bitcoin since at least 2021. Usually, the Ethereum index is higher than the Bitcoin index.
At the same time, data shows that the gap between Ethereum's 180 day implementation or historical volatility relative to Bitcoin is the smallest since 2020, almost positive.
Caroline Mauron, co-founder of OrBitMarkets, a crypto derivatives platform, said: "Low volatility usually helps institutional investors allocate more funds to cryptocurrencies, because it becomes cheaper to purchase protection and manage risk exposure." "Compression with poor volatility can encourage long-term investors to invest more in Ethereum."
Cryptocurrencies, including Bitcoin and Ethereum, have partially rebounded from the 2022 crash, which triggered the FTX exchange crash. But against the backdrop of sluggish liquidity, the recovery of Bitcoin has recently stagnated, which may to some extent indicate that investors' enthusiasm has been limited as the US crackdown on digital assets.
Bitcoin and Ethereum implied volatility indices are based on option pricing. Both indicators have fallen from their recent peak in March, but Ethereum has experienced a faster decline. The broader indicators for measuring cross asset volatility in global markets have also declined.
The Ethereum blockchain was upgraded in April, allowing investors to extract Ethereum promises to help operate the network in exchange for rewards - a process known as betting. The encryption industry sees returns as a benefit.
Richard Galvin, co founder of fund management company DigitalAsset Capital Management, said, "As its returns continue to rise and have reached high single digits, you can also expect that this may suppress volatility
The blockchain of Bitcoin is influenced by the explosive growth of irreplaceable tokens (digital collectibles) and memecoins based on software innovation.
Nevertheless, Noelle Acheson believes that the convergence of volatility characteristics between Bitcoin and Ethereum is still questionable.
She stated that "Ethereum is a relatively new asset with a lower market value and higher technical and regulatory risks." She added that the US Securities and Exchange Commission (SEC) continues to refuse to disclose whether it considers this token to be a security subject to its rules.
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