After three months of hiatus, the world’s largest cryptocurrency, Bitcoin managed to reclaim the lost domination of the rest of the cryptocurrency market. At the time of writing, BTC’s dominance rose to 62.6 %, the level last seen on 29 July 2020. To top the Digital Yuan testing and subsequent launch, along with US presidential elections coming closer, all eyes are now on Bitcoin.
Contrastingly, to previous trends wherein Bitcoin led rallies for the market, its gains have now pushed past the altcoin herd. This was evidenced by the falling one-month realized volatility for ETH-BTC. According to the crypto intelligence platform Skew, the figures dropped to 11% on the 27th of October. The last time the realized volatility numbers were close to this level was in the first week of July.
What does this mean?
This essentially meant that in the coming days, ETH’s price may increasingly trend like Bitcoin’s after a long time. It is important to note that Ether has outperformed its peers as DeFi gained traction in the third quarter of the year. Of late, the trend appeared to have reversed and Bitcoin has sprung back up in action after weeks of consolidation.
Ethereum has a completely different raison d’etre than Bitcoin. For the latter, the factors that contribute to its price movements are scarcity, holders, etc. For Ethereum, on the other hand, have been developments on the network such as the 2.0 launch or the ongoing DeFi hysteria. But for now, it is set to mimic Bitcoin’s price movement closely.
Further reinstating faith in the current trend of Bitcoin swaying Ethereum’s price action in the near-term as the at-the-money [ATM] implied volatility [IV] chart for ETH-BTC. The above chart essentially depicted that the spread is bound to continue falling with no signs of reversal in the trend. The Implied volatility for the coming months appeared to be nearing zero. But with the recent pace of Bitcoin’s rally, it might come as a bit of a surprise to the traders and might bring about certain alterations in the trends depicted in these charts.
The declining volatility might actually have a good impact on Ether’s price. Historically, the largest altcoin has higher volatility. Hence, it could see its price to climb for a rally higher within a short period of time when compared to that of Bitcoin. At least for the short-run, the dropping metrics could indeed be a blessing for ETH prices.