according to materials from - By Yellow News

Bitcoin's reputation as an unpredictable investment is rapidly fading. The world's largest cryptocurrency has lost its volatility: annual volatility has dropped to 38% from nearly 200% ten years ago, forcing speculative traders to seek thrills in other areas of the digital currency market.

This transformation reflects the growing influence of Wall Street on the Bitcoin market. Institutional buy-and-hold strategies have stabilized price movements, bringing Bitcoin's behavior closer to blue-chip stocks rather than speculative assets. According to Bytetree Asset Management, Bitcoin is currently trading with a volatility level comparable to that of well-known companies like Starbucks Corp. and Goldman Sachs Group Inc.

This stability has created an unexpected problem for traders who built their strategies on Bitcoin's notorious price swings. In the absence of sharp daily fluctuations, many have shifted their focus to Ethereum, the second-largest cryptocurrency by market capitalization.

This migration became evident in August's trading dynamics. Trading volumes for Ethereum exchange-traded funds matched or exceeded those for Bitcoin counterparts for several days, partly due to what analysts call corporate buying activity. Both cryptocurrencies rose on Friday after Federal Reserve Chairman Jerome Powell hinted at a possible interest rate cut at Jackson Hole.

On Friday, the price of Ethereum surged by more than 12%, reaching around $4750, while Bitcoin's price rose slightly by 3%, reaching $116,170. This difference illustrates a new market dynamic where Ethereum shows the same price behavior as Bitcoin.

BlackRock's Ethereum ETF, launched just four months ago in April, already has open option positions worth $5.5 billion. This accounts for approximately 40% of Ethereum positions on Deribit, a major cryptocurrency derivatives platform, indicating rapid institutional adoption.

"This is not a broad rally," said Jeff Dorman, Chief Investment Officer at Arca, a digital asset management firm.

He noted that trading activity has recently been concentrated primarily in Bitcoin and Ethereum, leaving other cryptocurrencies behind.

The motivation driving each asset varies significantly. Bitcoin is increasingly used as a long-term store of value, while Ethereum attracts traders seeking short-term profits through price volatility.

"For many traders, trading Bitcoin has already run its course," explained Vivek Raman, founder of the research firm Etherealize. "Ethereum still feels undervalued, more volatile, and more reactive."

Investment flows speak for themselves.
August's investment flows clearly demonstrate this divergence. Investors poured $2.5 billion into Ethereum ETFs while withdrawing $1.3 billion from Bitcoin products, resulting in a net influx of $3.8 billion in favor of Ethereum.

However, some market participants expect a reversal of this trend. Arthur Azizov from B2 Ventures predicts Ethereum consolidation in the range of $3900 to $4400 but warns of a possible drop to around $3000 if leveraged positions are quickly closed.

"Ethereum is moving into a state of risk aversion," said Bradley Duke, head of Bitwise's European division. "A short squeeze cannot be ruled out, but many funds are currently preparing for a pullback."

Volatility measures the price fluctuations of an asset over time, expressed as a percentage on an annual basis. Higher volatility indicates stronger price swings and investment risk. Exchange-traded funds (ETFs) are investment instruments that track underlying assets, allowing traditional investors to profit without directly purchasing cryptocurrencies.

Open option positions represent the total number of outstanding option contracts, reflecting market interest and potential future price fluctuations. Leveraged positions involve borrowing funds to increase potential profits but also significantly increase potential losses.

This change reflects a fundamental shift in the cryptocurrency market structure. In previous market cycles, the rallies of Bitcoin and Ethereum stimulated the entire landscape of digital tokens. Currently, smaller cryptocurrencies remain relatively quiet while the two largest cryptocurrencies dominate trading activity.

Bitcoin's evolution into a popular asset with decreasing volatility sharply contrasts with Ethereum's emergence as a new speculative playground.

It is unclear whether this divergence will ultimately lead to a revival of a broader altcoin market or if smaller tokens will remain sidelined forever.

The tension reflects a broader development in the cryptocurrency market: Bitcoin has established itself as digital gold, while Ethereum serves traders seeking traditional cryptocurrency volatility.

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