Last week’s market crash saw Ether (ETH), the native token of Ethereum’s blockchain, take smaller losses than industry leader Bitcoin (BTC).
While Bitcoin fell 10.5% last week, Ether lost 8.3%, resulting in a more than 2% gain in the widely tracked Ether-Bitcoin (ETH) ratio, market data show.
Analysts are split on why Ethereum’s Ether outperformed Bitcoin during last week’s market crash, given that Bitcoin is usually the preferred asset during market slides. Optimism about an impending U.S. launch of Ether futures-based exchange-traded funds (ETFs) likely helped the No. 2 cryptocurrency, according to Noelle Acheson, the author of the Crypto Is Macro Now newsletter. ETFs issue publicly traded securities that track the price movement of an asset’s futures contracts.
Markus Thielen, head of research and strategy at crypto services provider Matrixport, said Bitcoin’s bigger decline mainly stems from a lack of interest in Ether and other coins. Liquidity, or the ability of the market to absorb large orders at stable prices, has deteriorated significantly since the collapse of Sam Bankman Fried’s FTX exchange last November.
Griffin Ardern, volatility trader from crypto asset management firm Blofin, said the hedging activity of ETH options market makers was mainly responsible for Ether’s outperformance. Market makers are entities responsible for creating order book liquidity. They trade against market direction when gamma is positive, thereby arresting price swings.