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Effect of Bitcoin taking volatility away from Ethereum, and their traders

Effect of Bitcoin taking volatility away from Ethereum, and their traders

The bullish rally at the end of July was pretty significant for Ethereum. The valuation jumped above $250, $300, $350, and eventually surpassed $400 after more than 2-years. Ethereum’s rally was so dominant that options trader expected Ethereum to impute more volatility than Bitcoin itself.

ETH-BTC 3 months realized vol spread on 27th July was a measly 6.5%, which rose up to 36% on September 25th. Surprisingly, the vol spread has retained the same level now, for the past 3 weeks.

ETH-BTC 3 Month Vol Spread hasn’t moved a muscle; Why?

Source: Skew

At first glance, the consistent realized vol spread between Ethereum and Bitcoin could be due to a lack of push and pull between Ethereum and Bitcoin option traders. While the chart might seem like an anomaly, it is important to note that between September 25th and October 15th(i.e when the spread was 36%), ETH and BTC both resulted in periods of both pump and dump.

However, if the realized volatility chart of ETH-BTC is observed for a 1-month, 6-month time frame, a blatant drop can be pictured since the start of October.

Clearly representing that Ethereum is slowly expected to be less volatile in comparison to Bitcoin, the short-term volatility structure and the half-yearly trend was pretty transparent. Hence, it can be inferred that the consistent vol spread at 36% is due to the time-frame of that spread. The volatility spread calculated between Ethereum-Bitcoin on a time period of 3 months appeared balanced due to consistent hikes and drops, hence the 3M vol spread did not alter during this trading period.

Now, considering the trend is moving towards higher Bitcoin volatility, the market might soon witness a dip on the 3-month chart itself, with the vol spread dropping below 36%.

Implied Volatility Spread on a rise for ETH-BTC 

Source: Skew

Now, looking at the Implied Volatility spread between ETH-BTC, the chart indicated a rise which suggested that Ethereum’s volatility is further diverging away from any impact off Bitcoin’s price variation. While the asset might concur a divergence, the collective options market was still dominated by Bitcoin options as noticed in the realized vol spread charts.

For Bitcoin Options, it is a welcome break, since ETH options were incurring high Open-Interest over the past few months. With the drop in Ethereum’s volatility, Bitcoin Options might be the marquee trade yet again.


Author: by admin

Why Ethereum's growth of ERC-20 tokens matters

Why Ethereum’s growth of ERC-20 tokens matters

As an altcoin, Ethereum has been the leader in terms of its growth observed this year. The evolution of ERC-20 tokens along with the decentralized platform established on Ethereum were vital contributors to Ethereum’s performance. Although the beginning of the final quarter of 2020 did portray as though ‘DeFi was dead’, but that seems to have been just a hiccup.

ERC-20 and ETH

Ethereum ecosystem has expanded with novel use cases and products that have been garnering the attention of the users. The list of ERC-20 tokens on the network has also expanded and currently, there were 313,006 ERC-20 tokens and the prominent ones being Tether [USDT] on Ethereum, Binance coin [BNB], Chainlink [LINK], [CRO], and USD coin [USDC].

OKEx’s OKB token was in the sixth position, however, given the OKEx stopping withdrawals for all crypto, the coin has been witnessing a drawback.

With growing numbers of ERC-20 tokens, the market cap of the tokens reached parity with Ethereum’s market for the first time, noted Messari’s Ryan Watkins a couple of months back. This trend continued and now the market cap of the ERC-20 token surpassed the market cap of ETH by a significant margin.

Data from Watkin’s research suggested that 56% of the value stores on Ethereum now incentivized economic activity beyond the maintenance and execution of the ETH blockchain.

This growth has been mainly driven by stable coins and DeFi projects which resulted in the total value of all Ethereum assets to surpass $100 billion for the first time since 2018. The 2018 peak was the result of the 2017 ICO boom and to see such a momentum caused by stablecoins and the DeFi project, does invite questions on Ethereum’s independent growth.

However, as the work continues on ETH 2.0, the community expected solutions for various problems like congestion and scalability ailing the Ethereum blockchain. Its effectiveness will be tested upon release, until then ETH’s growth may be associated with mainly DeFi.


Author: by admin

Here’s why Tether (USDT) could overtake Ethereum by 2021

Here’s why Tether (USDT) could overtake Ethereum by 2021

Tether (USDT), the world’s largest stablecoin by market cap, could reach a valuation higher than Ethereum in 2021, the latest issue of Bloomberg’s Crypto Market Outlook suggested in a report earlier this month.

The trend is buoyed by the institutional shift towards and the demand for stablecoins in the cryptocurrency sector. In addition, governments around the world are similarly considering their own state-backed digital currencies, which can increase the demand for Tether, the report said.

At press time, the USDT is valued at nearly $16 billion and accounts for over 4% of the total crypto market cap. Ethereum, in contrast, sits on a $43 billion market cap at press time.

Mike McGlone, a senior commodity strategist at Bloomberg and author of the report, noted that the importance of USDT is growing as the stablecoin performs an increasingly vital function within the digital asset ecosystem.

He stated, “[The] USDt plays a pivotal role in the trading of digital assets resulting in many digital asset spot exchanges now denominating trading pairs in Tether rather than Bitcoin.”

Bloomberg’s #Crypto Outlook, October 2020 — #Bitcoin Trend, Adding Zeros

— Mike McGlone (@mikemcglone11) October 5, 2020

The Bloomberg report contrasted USDT with altcoin that fuelled the speculative crypto bubble of 2017. “Tether represents what many of the so-called cryptocurrencies aren’t: a stable form of payment,” the report stated. 

What cryptocurrency will become the main one in a year?

Paolo Ardoino, CTO at Tether, shared the sentiment in a statement to CryptoSlate:

“As the most stable, liquid, and trusted stablecoin, it is powering so much innovation in crypto at the moment. Tether is lubricating many of the powerful protocols that Ethereum has given birth to, such as those in DeFi. Of course, we don’t see ourselves as competing with Ethereum.”

Arduino added that eclipsing Ethereum’s market capitalization, which currently stands above US$40 billion, “will be a powerful statement.”

Meanwhile, on Tether’s position in the market alongside Bitcoin, Arduino said the team sees the USDT as a “complement to Bitcoin rather than a competitor.”

Tether works across a diversity of different blockchains, including Algorand, Bitcoin Cash’s Simple Ledger Protocol (SLP), Ethereum, EOS, Liquid Network, Omni, Tron, and Solana. Tether is driven to support and empower growing ventures and innovation in the blockchain space.

Meanwhile, Bloomberg’s McGlone forecasted that the continuation of quantitative easing measures and rising debt-to-GDP levels will provide a strong tailwind for the ascent of Bitcoin, with the digital gold asset on course to reach US$100,000 in 2025.

The post Here’s why Tether (USDT) could overtake Ethereum by 2021 appeared first on CryptoSlate.


Author: By TeamMMG

HUGE NEWS! Bitcoin AND Ethereum BOTH Get MAJOR Green Flags! This Bull Market Just Getting Started!

HUGE NEWS! Bitcoin AND Ethereum BOTH Get MAJOR Green Flags! This Bull Market Just Getting Started!

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Effect of Bitcoin taking volatility away from Ethereum, and their traders

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