- Ethereum is far more volatile than Bitcoin.
- Price volatility could be a boon for one Ethereum treasury company.
- Traders are hedging for possible turbulent price movements.
Ethereum’s price has nearly doubled this quarter, but one market analyst warns the second-largest cryptocurrency looks set for a turbulent time ahead.
Market analysis by Sean Dawson, head of research at Derive, a crypto options exchange, shows Ethereum’s volatility has widened against Bitcoin, rising to 24% from 18% since June.
Translation: traders expect Ethereum’s price swings to outpace Bitcoin’s, a dangerous trend for those who expect the upward rally to continue on autopilot.
“Traders are betting on a bumpy ride ahead for the second-largest crypto,” according to Dawson’s post on X.
While volatility could mean liquidation for highly leveraged traders, it’s a boon for ETH Strategy, a crypto native treasury protocol designed to capture Ethereum’s price volatility into yield for investors.
ETH Strategy seeded its Ethereum treasury in July with more than $46 million worth of the cryptocurrency.
“ETH Strategy [volatility] harvesters are due for some juicy yield,” Dawson noted, should Ethereum’s price indeed experience significant turbulence.
Dawson’s Derive does have some skin in the game. The exchange partnered with ETH Strategy in August to launch the latter’s Perpetual Note Vault, a product that generates yield from Ethereum options trading.
Dawson isn’t the only analyst who predicts possible price whipsaws for Ethereum.
In August, Illia Otychenko, lead analyst at crypto exchange CEX.IO, predicted volatile price action for Ethereum, at least in the short term, driven by aggressive selling and mounting shorts despite the overall bullish sentiments for the cryptocurrency.
And options traders seem to be hedging against possible price volatility with cautiously optimistic bets that the price won’t fall below $4,000 in September, according to data from crypto derivatives exchange Deribit.
They are more bullish for the October close, with options bets worth over $110 million piling into calls that Ethereum will trade above $5,000.
Some market analysts have predicted a strong end to the year for Ethereum, including Geoff Kendrick, head of digital assets at Standard Chartered, who has forecasted a $7,500 price for the cryptocurrency.
Arthur Hayes, chief investment officer at Maelstrom, has said Ethereum could reach $20,000 this cycle.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at osato@dlnews.com.
