K33 Research warned about the impending volatility

# Analysts from K33 Research warned of impending volatility

The ETH/BTC ratio has risen above 0.037, reaching a yearly high. This is stated in a new report by K33 Research, writes The Block.

Ethereum is outpacing Bitcoin in growth rates. Since June, Ether has risen by 70%, while the first cryptocurrency has only increased by 9%. However, the weakening connection with traditional assets and active risk hedging in the derivatives market create a foundation for sharp price fluctuations, analysts noted.

According to them, the main driver of the Ethereum rally is "double demand". On one hand, in two months, ETF based on the asset attracted $9.4 billion. On the other hand, corporate treasuries have accumulated more than 2% of the total Ethereum supply.

Throughout the entire time, exchange-traded funds and public companies have absorbed more than 8% of the issuance of the second largest cryptocurrency by market capitalization.

The amount of Ethereum on the accounts of public companies and ETFs. Source: Strategic ETH Reserve Analysts emphasized that leveraged products have attracted particular interest from investors. The 2x leveraged ETF from VolatilityShares attracted 456,000 ETH and now represents 61% of the open interest on CME.

What is happening with Bitcoin?

Bitcoin showed an opposite dynamic to Ethereum. After the release of the Producer Price Index, which rose by 0.9% in July against the expected 0.2%, the price of the first cryptocurrency sharply fell from $121,000 to $115,000.

CME futures premiums, which previously reached double-digit values, have decreased to 5.5% annually. Open interest on the exchange has risen to 143,000 BTC but remains at levels seen at the beginning of May. The indicator in the perpetual futures market is nearly twice as high — 300,000 BTC.

Meanwhile, the imbalance in the cost of options has reached a two-year high. This indicates active risk hedging by traders, K33 stated.

The situation in the segment of spot Bitcoin ETFs is also ambiguous. By the end of the second quarter, the assets under management of exchange-traded funds reached a record level — $134.6 billion.

However, in August, cash flows weakened, while Ethereum-based products continue to attract capital. According to analysts, this imbalance combined with a decrease in the correlation of cryptocurrencies with traditional assets may lead to increased volatility and sharp price movements in either direction.

Recall that on August 20, the head of the European research department at Bitwise, Andre Dragosh, predicted the growth of Bitcoin to $200,000. According to him, this will be facilitated by the inclusion of digital assets in pension plans in the USA.