IMPORTANT POINTS:
- Ethereum gains more than Bitcoin with rising tech stocks: The ETH/BTC exchange rate tends to increase when tech stock prices rise.
- A stronger US dollar affects Ethereum more: A more expensive greenback compared to other currencies tends to have a more negative effect on Ethereum than on Bitcoin.
- Ethereum Unlimited Supply vs. Bitcoin Cap: The different responses of Ethereum and Bitcoin to macroeconomic factors may be based on Ethereum’s unlimited supply.
A recent report from the CME Group indicates that technology stocks, the US dollar, and the supply of Bitcoin (BTC) are key factors influencing the movement of Ethereum (ETH).
According to the derivatives giant, Ethereum earns more than Bitcoin when tech stock prices rise.
The report notes that the ETH/BTC exchange rate tends to rise when tech stock prices jump, as the rally benefits Ethereum more than Bitcoin.
“Since May 2022, ETHBTC’s one-year moving correlation to the tech-heavy Nasdaq 100 Index has consistently been around +0.2 and sometimes as high as +0.3. It has a similar correlation with S&P 500 tech sector futures. This suggests a modest but persistent positive correlation between tech stock movements and ETH movements relative to BTC.”
On the other hand, a stronger US dollar produces the opposite effect. A more expensive greenback compared to other currencies produces a more negative result on Ethereum than on Bitcoin, although the trend is not extremely strong.
“On days when the Bloomberg Dollar Index (BBDXY), which measures the USD against 10 major currencies, goes up, ETHBTC tends to go down.”
The report notes that BTC and ETH react differently to these macroeconomic factors due to the economics of Ethereum’s unlimited supply and Bitcoin’s 20 million coin cap.
“The different responses to ETH and BTC may be based on how ETC and BTC are used and the different ways they are supplied to the market.”
