(Bloomberg/Sidhartha Shukla) — Bitcoin, once the unruly child of finance, is showing signs of maturity as its wild swings fade, forcing speculative traders to hunt for a new playground.
The world’s biggest cryptocurrency is behaving more like a blue-chip stock as Wall Street’s buy-and-hold investors plunge in. Annualized volatility has dropped to a once-unthinkable 38% from close to 200% more than a decade ago. It is now comparable to the likes of Starbucks Corp. or Goldman Sachs Group Inc., according to Bytetree Asset Management.
Investors chasing price swings are instead turning to rival Ethereum, the second-largest virtual currency. On several trading days this month, Ether exchange-traded fund volumes have matched or surpassed their Bitcoin counterparts on the heels of a corporate-buying frenzy.
Both currencies rose Friday after Federal Reserve Chair Jerome Powell opened the door to an interest-rate cut in September at the central bank’s Jackson Hole Symposium. Ether jumped more than 5% to around $4,500, while Bitcoin – in keeping with its steady price moves of late — edged up less about 2% to $114,800.
BlackRock’s Ether ETF launched only in April, already accounts for $5.5 billion in open options positions, roughly 40% the amount for Ether on the crypto-derivatives platform Deribit.
The setup reflects a familiar rotation. Bitcoin is increasingly seen as a long-term hold. Ethereum, still earlier in its institutional uptake, has become the go-to asset for traders seeking sharper swings.
“This is not an everything rally,” said Jeff Dorman, chief investment officer at digital asset manager Arca, who notes most of the trading activity of late is concentrated in Bitcoin and Ether.
But the motivations differ. “For many traders, the Bitcoin trade has already played out,” said Vivek Raman, founder of research firm Etherealize. “Ethereum still feels under-owned, more volatile, and more reactive.”
So far in August, investors have added $2.5 billion to Ether ETFs, compared with net outflows of $1.3 billion from Bitcoin products.
Some traders are now positioning for a reversal. Arthur Azizov of B2 Ventures expects Ether to consolidate between $3,900 and $4,400, but warns that a drop to the low $3,000s is possible if leveraged bets start to unwind.
“Ethereum is moving into a risk-off sentiment,” said Bradley Duke, Bitwise’s European head. “A short squeeze can’t be ruled out, but for now, many funds are preparing for a pullback.”
In past cycles, rallies in Bitcoin and Ether often lifted the broader market. This time, the rest of the digital-token landscape remains comparatively quiet. For now, Bitcoin is the steady anchor while Ethereum is where the volatility lives.
The tension reflects a market in transition: Bitcoin maturing into a mainstream asset with declining volatility, and Ethereum emerging as the speculative playground for traders seeking risk. Whether that divergence sparks a broader altcoin revival or leaves smaller tokens sidelined remains to be seen.
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