Bitcoin's Declining Volatility Shows "Blue-Chip" Characteristics as Speculative Capital Shifts to Ethereum

Stock News
Aug 22

Bitcoin assets are increasingly showing signs of maturity as their dramatic volatility gradually subsides, forcing speculative traders to seek new investment territories. The world's largest cryptocurrency is performing more like a blue-chip stock, attracting long-term investors from Wall Street. Its annualized volatility has declined from nearly 200% over a decade ago to an almost unimaginable 38% today. According to Bytetree Asset Management, its volatility now matches that of companies like Starbucks (SBUX.US) or Goldman Sachs (GS.US).

Investors chasing price swings are now turning to competitor Ethereum, the second-largest virtual currency. On several trading days this month, Ethereum ETF trading volumes matched or even exceeded Bitcoin's volumes, following a wave of corporate purchasing enthusiasm. BlackRock's Ethereum ETF, launched only in April, already has $5.5 billion in existing options positions, accounting for approximately 40% of total Ethereum holdings on crypto derivatives platform Deribit.

This positioning reflects a common investment pattern. Bitcoin is increasingly viewed as a long-term hold asset, while Ethereum's acceptance among institutional investors came somewhat later, but it has become the preferred asset for traders seeking greater volatility.

"This isn't a broad-based rally. Most of the recent trading activity has been concentrated in Bitcoin and Ethereum, but the motivations differ," said Jeff Dorman, Chief Investment Officer at Arca.

Vivek Raman, founder of research firm Etherealize, stated: "For many traders, Bitcoin trading has completed its cycle. Ethereum, however, still appears underowned, more volatile, and more responsive."

On Friday, both cryptocurrencies showed little change as financial market traders closely watched Federal Reserve Chairman Powell's important speech at the Jackson Hole symposium.

As of August, investors have poured $2.5 billion into Ethereum ETFs, while Bitcoin-related products experienced $1.3 billion in net outflows. Some traders are currently preparing for a market reversal.

Arthur Azizov of B2 Venture Capital expects Ethereum to consolidate between $3,900 and $4,400, but warns that if leveraged bets begin unwinding, Ethereum could fall below $3,000. Last Friday, Ethereum traded at $4,280.

"The Ethereum market is gradually showing risk-averse sentiment. While short covering cannot be completely ruled out, many funds are currently preparing for market corrections," said Bradley Duke, Head of Bitwise Europe.

In past cycles, gains in Bitcoin and Ethereum typically drove the entire market higher. This time, performance in other digital token sectors has been relatively subdued. Currently, Bitcoin serves as a stable supporting force, while Ethereum operates in a highly volatile zone.

This tension reflects a market in transition: Bitcoin is gradually becoming a mainstream asset with declining volatility, while Ethereum has become a speculative playground for risk-seeking traders. Whether this divergence will trigger a comprehensive revival of other cryptocurrencies or marginalize smaller tokens remains to be seen.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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