Bitcoin, once known to be the most volatile market in the finance space, is now acting calm and steady. The big swings that once made it famous are fading and this is pushing investors that love taking high risk to look for action somewhere else.
According to a report from Bloomberg, the world’s largest cryptocurrency is beginning to look more like a traditional stock than a risky gamble.
Bitcoin’s annual volatility has dropped to 38%, according to Bytetree Asset Management. The number was close to 200% over a decade ago. This means Bitcoin now moves in the same way that known firms like Tesla, Starbucks and co move. Some investors believe that the calm movement is because Bitcoin is turning into a long-term hold, and no longer for fast profits.
Because of this, attention is shifting to Ethereum, the second largest crypto on the chart. Recently, on several trading days this month, Ether exchange-traded funds (ETFs) have matched or even beaten Bitcoin in inflow due to shift in demand and purchase from corporate firms.
For instance, BlackRock’s Ether ETF, which was launched in April 2024, has already built $5.5 billion in open options positions. This equals about 40% of all Ether options on the trading platform Deribit. For many traders, this proves Ethereum has become the new place for faster price changes.
“This is not an everything rally,” said Jeff Dorman, chief investment officer at digital asset firm Arca. He explained that trading action is mainly focused on Bitcoin and Ethereum, not on smaller tokens.
However, the motivations differ between the two assets. “For many traders, the Bitcoin trade has already played out,” said Vivek Raman, founder of research firm Etherealize. “Ethereum still feels under-owned, more volatile, and more reactive.”
This month alone, Ether ETFs have seen $2.5 billion in inflow, while Bitcoin funds have suffered net outflows of $1.3 billion, according to Coinglass data.
But, the risk still remains, Arthur Azizov of B2 Ventures predicted that Ether prices could continue to consolidate between $3,900 and $4,400, but warned the price could slip toward the low $3,000s if leveraged trades unravel. As of the time of writing this report, Ethereum is trading for $4,775, up 13% today, according to CoinMarketCap.
“Ethereum is moving into a risk-off sentiment,” said Bradley Duke, European head of Bitwise. “A short squeeze can’t be ruled out, but for now, many funds are preparing for a pullback.”
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