While cryptocurrencies have long been greatly affected by the broader financial market, the price of ethereum (eth) seems especially affected by its movements.
According to data recently published by IntoTheBlock, the correlation between eth and several traditional market indices is now much higher than that between its largest rival, bitcoin (btc), and the markets themselves.
bitcoin, ethereum and stocks
The company's figures show a correlation coefficient of 0.7 between eth and the DAX, a stock index that tracks 40 of the largest and most liquid German companies listed on the Frankfurt Stock Exchange. The equivalent correlation for btc is 0.63.
A larger discrepancy is found with both the S&P 500 and the technology-focused Nasdaq 100. eth's correlations with both indices are 0.77 and 0.7 respectively, compared to bitcoin's correlations of 0.56 and 0.44.
Meanwhile, both digital assets boast negative correlations with the US Dollar Index, although eth's correlation is much stronger than btc's, with correlations of -0.61 and -0.33 respectively.
“eth's correlation with traditional markets like the Nasdaq 100 is currently significantly higher than that of btc.” twitter.com/intotheblock/status/1780601315745530161″ data-wpel-link=”external” target=”_blank”>wrote IntoTheBlock on twitter on Wednesday.
What about bitcoin ETFs?
The trend may seem ironic, given that bitcoin (btc) was recently approved for trading on US stock exchanges in the form of several spot ETFs in January.
The event has enabled approximately $12.5 billion worth of inflows into the asset through new investment vehicles, providing access to the asset previously unavailable to many institutional funds.
By contrast, ethereum's prospects of receiving approval for a US-listed spot ETF in the near future are becoming bleaker by the day. Bloomberg ETF analyst Eric Balchunas now puts the probability of a May approval at 25% and is not sure the crypto industry will even fight back against regulators if the product is rejected.
In comments shared with CryptoPotatocrypto fund manager Bitwise has revealed that financial advisors understand that bitcoin and ethereum have different roles in a portfolio.
“Advisors find it helpful to explain that btc can be viewed as an allocation similar to gold and eth as an allocation similar to a high-growth tech stock,” Bitwise analyst Juan León said in November.
Since the approvals, eth has steadily lost ground against btc, with the eth/btc ratio declining from 0.06 on January 13 to 0.049 today.
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