While the bitcoin community was waiting for a much-anticipated decision by the United States Securities and Exchange Commission, the mood was thick and jittery.
Around 9AM New York time on Friday March the 10th, someone, or perhaps a bot, sent price to an all-time high of $1,339. Within one minute, it went down to $1,067, to then recover and stand around $1,260.
That’s how the day opened, with all focusing on the SEC decision which came at 16:03:12 New York Time. It was a rejection. Bitcoin’s price fell hard within minutes, reaching a low of $958.
Perhaps surprisingly, it quickly recovered, now trading at almost $1,200. At the same time, ethereum rose by more than 20%, shooting up to 0.02 btc, now standing at more than $20 and seemingly heading for a breach of its all-time high.
While bitcoin is used as a hedge against the monetary system, this inversely correlated move suggests ethereum is being used as a hedge against bitcoin. It seems traders not only sold bitcoin after the SEC’s surprising decision, but also bought eth at the same time.
The reason might be because the market is unsure regarding the valuation of the two currencies. Specifically, the market appears uncertain as to which one is better.
This suggests a sort of race. When bitcoin does well, eth appears to enjoy the gains, when bitcoin has a setback, eth appears to be the escape.
Eth, of course, has had its own problems which breach this apparent correlation. It is a new currency with very different functionalities, a different community and a different underlying philosophy. Its price has its own unique causes, but it seems that where there isn’t any eth specific event, the currency appears to be seen as a hedge.
That suggests the two currencies are in a competition. With bitcoin suffering a significant setback probably mainly due to its brand reputation, eth has gained.
The latter currency appears to be viewed more favorably by household brands which have recently announced an alliance. Its philosophy of political neutrality, its focus on technology, as well as its capable leadership, appears to give them an edge.
While the bitcoin community has been mired in division over the past two years, eth seems to be a happy place. It seems to have learned from the difficult road bitcoin walked, but that means it is also different.
Bitcoin is the hardened pioneer, forged under fire, sent to sink or swim so often. Eth is the young brother, learning from wiser experience. Bitcoin has that anti-establishment spirit, confronting the incumbents, while eth is more subtle, proposing a win-win.
Looking at the bigger picture, there is no doubt the biggest story in this space is the race between these two currencies, but less in a zero-sum way and more regarding which one will grow the total pie further.
In many ways, they are complementary. Bitcoin’s success means eth’s success and vice versa, but in some way, the race is head on.
There can only be one top position. The market is obviously saying that for now it is bitcoin, but, the market appears jittery. They clearly seem to think eth may get there if this inverse correlation behavior is to tell us anything.