The Ether-Bitcoin Ratio Rises as Ether Outperforms Bitcoin During Market Crash
The recent market crash resulted in smaller losses for Ethereum’s native token, ether (ETH), compared to bitcoin (BTC). While bitcoin fell 10.5%, ether only lost 8.3%, leading to a more than 2% gain in the ether-bitcoin ratio. This is unusual as investors typically prefer bitcoin during times of market stress. Analysts have identified several factors contributing to this trend:
- Optimism about an impending U.S. launch of ether futures-based exchange-traded funds (ETFs) likely boosted ether’s performance. Despite being considered inferior to spot-based ETFs, futures-based ETFs provide a convenient way for retail and institutional investors to diversify their crypto exposure.
- At least 16 applications for ether futures ETFs or ether-bitcoin futures ETFs are awaiting regulatory approval in the U.S., indicating growing interest and potential inflows into the asset.
- Markus Thielen, head of research and strategy at Matrixport, believes bitcoin’s bigger decline can be attributed to a lack of interest in altcoins, including ether.
- Liquidity in the crypto market has decreased, leading larger players to focus on bitcoin instead of trading illiquid altcoins. Altcoin liquidity on U.S.-based exchanges has declined significantly, affecting their performance during market downturns.
- The hedging activity of ETH options market makers played a role in preventing ether’s price from falling sharply. Market makers act as buyers rather than sellers when the price falls, contributing to price stability.
Overall, the rise in the ether-bitcoin ratio can be attributed to optimism surrounding ether futures-based ETFs, pending regulatory approvals, and the actions of market makers. These factors have contributed to ether’s outperformance during the recent market crash.
Hot Take:
The unexpected outperformance of ether during the market crash suggests that the cryptocurrency’s growing popularity and potential ETF launches are influencing its market dynamics. As investors seek alternative opportunities, ether’s unique qualities and potential for further development make it an attractive choice, leading to a shift in sentiment and investment flows.
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