Roller-coaster. After diving some 50%, from a high of $217 to a low of $116, Ethereum has considerably recovered today, rising some 40% to now trade at around $178 on one of the bigger eth exchange, Coinbase.
The quick recovery might have not been expected by many who may have thought a bubble had burst, but the sharp fall yesterday appeared to be mainly due to bitcoin where panic appeared to be brewing.
That seems to have stabilized somewhat too which may suggest yesterday’s event was just a correction instead of the beginning of a bear market, but whether that is indeed the case won’t be clear for some weeks.
Nor is the relationship between ethereum and bitcoin very clear as far as recent behavior is concerned. Yesterday’s sharp fall suggests bitcoin’s downwards price movement affects eth, but today’s rise might indicate that upwards pressure for ethereum lifts bitcoin up too.
The reason might be due to the BTC/ETH trading pair on Poloniex which has considerable volume, but that now accounts for just 11% of eth’s total volume according to Coin Market Cap.
One good theory might be China. The three biggest exchanges did not list ETH last year when it started getting attention. Thus, the easiest way for Chinese citizens to enter the eth market may have been by buying bitcoin then converting it to eth on shapeshift or Poloniex.
The effect of that would be an increase in bitcoin’s price if eth’s demand increases, and a decrease in eth demand if bitcoins price falls as potential investors would probably wait out to see how low bitcoin can go. Thus explaining eth’s relationship to bitcoin.
That, however, may be about to change. Huobi, one of China’s biggest exchange, is to list ethereum trading from the 31st of May 2017. Chinese citizens can now more easily enter the eth market, thus the relationship between bitcoin and ethereum may begin to change.
Huobi’s announcement may further explain the quick recovery which seems to have dragged up all of the digital currency space as everything is green today. As good as almost all currencies are up.