The crypto investors are surprised with the uptrend in both Bitcoin and Ethereum with around 10% gains in a day. However, the most interesting side of the upside movement is not the percentage of spike in the prices; but the stability, an even loss of value, in altcoins while the pioneers are up and strong.
There are a couple of reasons behind the difference in the performance of Bitcoin, Ethereum, and other coins. First of all, the Bitcoin Spot ETFs enabled the stock investors to buy and hold Bitcoin in the form of ETFs. The growing risk appetite in the markets made the investors meet Bitcoin before the others joined the party.
For Bitcoin, the new destiny of it as a " financial asset " is common with the other technology companies. Bitcoin, unescapably, became a part of them. When it comes to Ethereum, the ETFs are not approved yet and the coin diverged with Bitcoin due to the massive demand thanks to the approved Bitcoin Spot ETFs. Now, the BTC/ETH ratio is on the side of Bitcoin.
This chart show the way Ethereum tried to stay strong against the domination of Bitcoin even though Ethereum became deflationary due to the excessive amount of ETH being bridged, staked and burned for the transaction fees on both mainnet and Layer 2 protocols.
Actually, the discrepancy occurred as an ETF impact and ETH may be able to close the huge gap with its next move after the approval of Ethereum Spot ETFs.
The other side of the coin is purely about market psychology that is controlled via the price of Bitcoin.
AI & Bitcoin Push on Markets
The positive atmosphere with NVIDIA's magnificent performance did not last long.
The markets need some strong reasons to test the record levels to open another chaper with all - time - high prices. For NASDAQ, this is nothing easy as people know that:
- Insider traders are selling
- The hype on technology was driven by 7 big companies
- Almost all investors are in profit
In the markets, there is no way that everyone can win at the same time.
The investors are closer to the side of the bears as the tension is high and people are ready to get into the phase of FUD again.
Bitcoin, with its astonishing performance, proves that there risk appetite is high in the markets. What happens if Bitcoin drops drastically? The stock markets would see it as a threat and everyone would rush into Gold which is seen as the enemy of the interest rates of the U.S. Dollar.
The dilemma is that a strong DXY, the U.S. Dollar against other top fiat currencies, may accelerate the sell - off in the markets and the vicious cycle repeats itself until the central banks start to print money again.
If we are not ready for such chaos, then someone or something, Bitcoin, in this case, should hold the horses tight! Bitcoin is here to do so 😉
What do you think about the approach of risk appetite control via Bitcoin?
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