Is it possible that the performance of technology stocks has a greater impact on ether than on bitcoin? According to CME Group, the shifts in the Nasdaq 100, a tech-centric index, appear to affect the price of ether more significantly than bitcoin. The assertion was made in a recent report by Erik Norland, a senior economist and executive director at CME Group.
The Link Between Tech Stocks and Cryptocurrencies
On days when tech stocks see an upturn, the ETHBTC rate often follows suit, with ether reaping greater benefits than bitcoin. Norland’s analysis points to the differing ways ether and bitcoin are supplied to the market and utilized as the reason behind this disparity.
Ether’s practical applications within the Ethereum smart contract network are cited as a key factor. In contrast, bitcoin is primarily used as a volatile store of value and a hedge against the devaluation of fiat currencies.
Volatility in the Crypto Market
Despite their notorious price volatility, the exchange rate between ether and bitcoin, the world’s two largest cryptocurrencies, appears relatively stable. Over the past year, the daily volatility rate of the ETHBTC rate was around 30%, compared to 42% for bitcoin’s price and 59% for ether.
However, ether’s price movements are typically more extreme. When bitcoin rises, ether often rises even more, and when bitcoin falls, ether tends to fall harder. Despite these variances, the correlation between the two cryptocurrencies’ prices has remained around 0.85 over the past year, indicating a strong relationship.
Impact of the U.S. Dollar and Supply Changes
Ether also shows greater sensitivity to fluctuations in the U.S. dollar. According to the report, the ETHBTC rate responds more dramatically to changes in bitcoin supply than to ether supply. Norland noted that a stronger U.S. dollar seems to be more detrimental for ether than for bitcoin.
Interestingly, the supply of ether tends to increase following price rises relative to bitcoin, suggesting that ether’s supply is reactive to its price rather than driving it.
For those keeping an eye on cryptocurrency trends, platforms like cryptoview.io can provide valuable insights. This application offers a comprehensive view of the cryptocurrency market, helping users make informed decisions.
Start now using our tools for free.As we look towards the future, if bitcoin rallies ahead of its anticipated April 2024 halving as it has done before, this could potentially boost ether prices further on a relative basis.
