What Happened: Ethereum’s daily trading volumes nearly doubled Bitcoin’s on Tuesday, leading market participants to wonder if new money favored the second largest crypto asset over the first.
Grayscale’s CEO Michael Sonnenshein confirmed that it wasn’t just retail traders contributing to higher Ethereum (CRYPTO: ETH) trading volumes. According to the most recent data, the notional volume for the Grayscale Ethereum Trust (OTCQX: ETHE) even surpassed volume for the Grayscale Bitcoin Trust (OTCQX:GBTC).
Meanwhile, a leaked report from Goldman Sachs pointed to a “greater number of transactions in ether vs bitcoin” as a reflection of Ethereum’s dominance.
“Given the importance of real uses in determining the store of value, ether has a high chance of overtaking bitcoin as a dominant store of value,” said the analysts in the report.
Why It Matters: While a bullish case for Ethereum is apparent, whether or not it will overtake Bitcoin during this cycle still remains to be seen, especially given that there hasn’t been any significant decoupling between the ETH and BTC.
In fact, the recent selloff may have undone any decoupling that took place over the past few months, as highlighted by Messari research analyst Mira Christanto on Twitter.
“Correlation with Bitcoin also increased dramatically over the week. All assets now have a correlation greater than 60%, with some reaching highs of 80%,” she said.
The increase in correlation would mean that for every swing in the price of Bitcoin, Ethereum would likely move in the same direction.
Price Action: At the time of writing, Bitcoin was trading at $38,502, gaining 2.3% in the past 24-hours. Meanwhile, Ethereum’s price moved up by 7.88% and was trading at $2,756.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.