From one new report from CME Group shows that Ethereum rises more than Bitcoin when the prices of US tech stocks rise. Furthermore, CME Group notes that, in addition to shares of technology companies, the US dollar and Bitcoin are the most important factors in the Ethereum price.
Ethereum is like a tech stock
Can we conclude from this that Ethereum is a kind of technology stock? At least that’s how the market seems to judge it. You often hear about Ethereum that it is a platform for building decentralized applications.
In that respect, you could argue that with Ethereum you invest indirectly in the success of the platform. The more people use applications on Ethereum, the more demand there will theoretically be for the token.
That would be a possible explanation for the fact that Ethereum benefits more than Bitcoin from the price increases of the Nasdaq 100. Bitcoin, on the other hand, is primarily an alternative currency, a decentralized form of money.
“Since May 2022, the correlation of the ETH/BTC trading pair with the Nasdaq 100 has been consistently around +0.2 and sometimes even +0.3. It has a similar correlation to the S&P 500 Technology Select Sector Futures. This suggests a modest but persistent positive correlation between the movements of technology stocks and Ethereum’s movements against Bitcoin,” said CME Group.
Ethereum and the US dollar
According to CME Group, the US dollar has an opposite effect. A stronger US dollar relative to other fiat currencies generally results in a more negative outcome for Ethereum than for Bitcoin, although that relationship is not extremely strong.
“On days when the Bloomberg Dollar Index (BBDXY), which measures the US dollar against 10 major fiat currencies, we generally see ETHBTC fall,” continues CME Group.
In the study, CME Group explains Ethereum’s tougher response to these macroeconomic conditions by Ethereum’s unlimited supply and Bitcoin’s 21 million unit cap.
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