Risk-hungry traders look to Ethereum, altcoins as Bitcoin’s volatility bottoms out

Bitcoin is finally acting its age. After years of wild price moves that made it the symbol of chaos in finance, its behavior is now tame enough to bore the average trader.

The once-hyperactive token is slowly turning into a stable asset, and that is driving short-term traders straight into Ethereum’s arms.

According to Bytetree Asset Management, Bitcoin’s annualized volatility has collapsed to 38%, down from nearly 200% over ten years ago. That puts it in the same category as Goldman Sachs or Starbucks in terms of risk.

And the reason is obvious: institutions are here. Wall Street’s buy-and-hold crowd is loading up on Bitcoin and sitting tight. They’re not flipping coins for quick gains, they’re parking money. That strategy is sucking the life out of Bitcoin’s volatility, and it’s creating a vacuum where action-hungry traders no longer feel at home.

Traders ditch Bitcoin and pour into Ethereum

So where’s the chaos now? Ethereum. With Bitcoin acting like a grown-up, Ethereum has become the go-to for anyone who still wants to chase swings.

On multiple trading days this month, Ether ETF volumes matched or beat Bitcoin’s, riding a wave of corporate buyers trying to capitalize on faster movement.

The BlackRock Ether ETF, launched in April, has already racked up $5.5 billion in open options positions, which is 40% of the total Ether options on Deribit. Ethereum isn’t just a backup plan, it’s the new casino floor.

“For many traders, the Bitcoin trade has already played out,” said Vivek Raman, head of Etherealize. “Ethereum still feels under-owned, more volatile, and more reactive.”

This isn’t some broad market surge. “This is not an everything rally,” said Jeff Dorman, investment chief at Arca. Most of the trading is locked in on Bitcoin and Ethereum, and even then, for very different reasons. One is the new savings account. The other is still the playground.

The numbers say it all. August flows show $2.5 billion pumped into Ether ETFs, while Bitcoin products saw $1.3 billion pulled out. Ethereum’s upside now comes with real momentum, but that also means more risk.

Traders like Arthur Azizov at B2 Ventures are bracing for a reversal. He sees Ether hovering between $3,900 and $4,400, but warns a drop to the low $3,000s is possible if too many leveraged positions start to unwind.

And that’s not a wild scenario. Ether was sitting at $4,280 on Friday. If those leveraged bets snap, the fall could be sharp. “Ethereum is moving into a risk-off sentiment,” said Bradley Duke of Bitwise Europe. “A short squeeze can’t be ruled out, but for now, many funds are preparing for a pullback.”

Bitcoin becomes the anchor, not the driver

While Ethereum burns rubber, Bitcoin is holding the wheel steady. The rest of the crypto market? Silent. In past rallies, when Bitcoin and Ether moved, smaller altcoins followed.

That’s not happening now. This time, it’s Bitcoin playing the adult, Ethereum taking the risks, and the rest of the tokens watching from the sidelines.

And under the surface, some big things are brewing in Bitcoin’s price structure. According to on-chain metrics, a heavy cluster of supply between $113,000 and $120,000 was bought by investors who’ve held the token for less than 3 months. These short-term holders are now sitting on unrealized losses as the market cools.

To track how they react, analysts look at SOPR by Age, a metric showing whether newer investors are selling at a loss or profit. Right now, SOPR for this group is hovering around 0.96 to 1.01, meaning they’re selling at small losses.

But if pressure mounts, the same group could capitulate, and local bottoms usually form when SOPR for short-term holders drops under 0.9.

Bitcoin and Ethereum barely moved on Friday, but markets weren’t sleeping. Everyone was waiting for Jerome Powell’s speech at the Jackson Hole Symposium, with traders from all corners of finance watching for any changes in Fed policy that could affect crypto.

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