A new report from CME Group says that tech stocks, the US dollar and Bitcoin (BTC) supply are key drivers that influence the movement of Ethereum (ETH).
According to the derivatives giant, Ethereum gains more than Bitcoin when the prices of technology stocks increase.
The report says that the ETH/BTC exchange rate tends to rise when tech stock prices jump because the rally benefits Ethereum more than Bitcoin.
“Since May 2022, the one-year rolling correlation of ETHBTC with the tech-heavy Nasdaq 100 has been consistently around +0.2 and sometimes as high as +0.3. It has a similar correlation with the S&P 500 Technology Select Sector futures. This suggests a modest but persistent positive correlation between the movements of technology stocks and the movements of ETH relative to BTC.”
Meanwhile, a stronger US dollar gives the opposite effect. A more expensive greenback compared with other currencies produces a more negative outcome on Ethereum than on Bitcoin albeit the tendency is not extremely strong.
“On days when the Bloomberg Dollar Index (BBDXY), which measures the USD versus 10 major currencies, rises, ETHBTC tends to decline.”
The report says BTC and ETH react differently to these macroeconomic factors because of the economics of Ethereum’s unlimited supply and Bitcoin’s cap of 20 million coins.
“ETH and BTC’s differing responses may be grounded in how ETC and BTC are used and the different ways in which they are supplied to the market.”
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