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For what appears to be the first time in about 24 months, many crypto heads and analysts are saying bitcoin – the world’s number one digital currency by market cap – will be more volatile in the coming future than its closest relative Ethereum, which has long been the number two crypto and bitcoin’s primary competitor.
Bitcoin Is on the Verge of Beating Ethereum in the Volatility Dept.
The funny thing about a statement like this is that throughout its short history, Ethereum has always been more volatile than its daddy. This is largely because the asset came second and has a lot less experience in the space. It is also largely reflective of a secondary market which usually finds itself victimized by macroeconomic problems.
Still, per new technical analyses of both assets, it appears bitcoin is more likely to endure hardcore swings in the coming months than Ethereum. Jeff Anderson, chief banking officer at quantitative trading firm and liquidity provider Folkvang, commented in an interview:
Bitcoin is in the spotlight again as cracks in [the] fractional reserve banking system cause distrust in fiat systems. Bitcoin dominance has ripped higher this month as the market scrambles for hard money and protection from impending fiat supply inflation.
The discussion also comes at an odd time given how strong bitcoin has been over the last two months. BTC endured a very harsh 2022 given that in November of 2021, it reached a new all-time high of about $68,000 per unit, and just 12 months later, the currency had fallen into the mid-$16K range. That’s a loss of more than 70 percent in just a single year.
Sadly, many additional assets (including Ethereum) chose to follow in its footsteps and contribute further to the crashes of the space, thus causing the digital currency industry to lose more than $2 trillion in overall valuation. It was a sad and ugly sight to see.
However, at the time of writing, the US and Europe are enduring harsh banking crises that have caused several financial platforms (i.e., Silvergate Bank, Silicon Valley Bank, and Signature Bank) to crash and burn within a few weeks of each other. During this period, bitcoin is enjoying a nine-month high and is trading in the $28K range, up roughly $12K from where it ended 2022.
Patrick Chu – director of institutional sales and trading at over-the-counter crypto tech platform Paradigm – threw his two cents into the conversation, saying:
The negative spread is reflective of the two assets increasingly viewed as similar, yet different proxies of risk. Both markets are much deeper and liquid than the rest of the coins with established use cases.
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Jeff Anderson finished with:
I do think there is real value in owning ETH variance into the Shanghai upgrade. The event risk there is underpriced, and options appear cheap.