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Ethereum’s dependence on Bitcoin reached 65% — Bitwise
Bitcoin price dynamics remain the dominant factor for Ethereum’s rate. About 65% of the weekly price fluctuations of the second-largest cryptocurrency by market capitalization are explained именно by the price of the leading cryptocurrency, Bitwise analysts stated. Experts analyzed Ethereum’s price over 406 weeks, since May 2018.
Analysts identified an almost linear relationship: for every 1% change in Bitcoin’s price, Ethereum reacts with a movement of approximately 0.99% in the same direction. In essence, the second-largest cryptocurrency is traded not as an independent asset, but as a secondary instrument for investing in Bitcoin, blockchain specialists stated.
The second most significant factor, explaining about 11% of Ethereum price changes, is economic conditions. This refers to the availability of money and credit: when macroeconomic conditions are loose and liquidity is high, Ethereum, as a risk asset, rises. Conversely, tightening financial conditions leads to a decline in its value, Bitwise representatives reported.
Flows into exchange-traded funds (ETFs) based on Ethereum also have an impact, but not as significant: they account for only about 10% of price changes, analysts believe.
Ethereum’s fundamental indicators are hardly reflected in ETH’s price, experts noted. Network activity, namely the number of active addresses, explains on average only about 6% of price fluctuations. Transaction fee revenues have even less significance, and Bitwise analysts excluded them from their model, calling them “noise rather than signal.” Overall, the market currently does not perceive the Ethereum blockchain as a technological company with stable cash flow, therefore the cryptocurrency’s capitalization moves independently from its native network, Bitwise analysts stated.
After the Fusaka upgrade in the Ethereum network, the number of address poisoning attacks sharply increased. According to Etherscan analysts, over the past three months the number of “crypto dust transfers” in USDT increased by 612%.
