Vibe Check: Ether Finds Support: CoinDesk Indices' Todd Groth

Periodic observations and market musings from Todd Groth, Head of Research, CoinDesk Indices.

AccessTimeIconJan 26, 2024 at 2:05 p.m. UTC
Updated Mar 8, 2024 at 8:32 p.m. UTC
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Support in the ether.

It looks like we’ve hit a decent level of support for ether (ETH) as we hug the $2,200 level and, coincidentally, the 38 Fibonacci retracement level - one of the indicators traders use to gauge potential price stall or reversal.

ETH finds support at $2,200 level (TradingView/CoinDesk)
ETH finds support at $2,200 level (TradingView/CoinDesk)
Bitcoin and ether trend indicators (CoinDesk Indices)
Bitcoin and ether trend indicators (CoinDesk Indices)

As we wait for more constructive price trends to re-emerge within the market, it’s a good time to check in on the macro environment.  While we’ve recently seen an uptick in interest rates (10-year currently at 4.12%), the longer-term trend lower, for real rates, is still supportive for digital assets, especially the smaller-cap altcoins contained within the CoinDesk 20 Index- a benchmark that tracks top cryptocurrencies.

(CoinDesk Indices, Federal Reserve Economic Database FRED)
(CoinDesk Indices, Federal Reserve Economic Database FRED)

So how did the crypto options market price in the bitcoin (BTC) spot exchange-traded fund (ETF) launch? From a quick ex-post analysis of option implied vs subsequent realized volatility (see below), expectations in the markets have subsided after the event, and it looks like the bitcoin options market gang correctly priced in the market reaction while team ether options were asleep behind the wheel w.r.t. the rally in ETH post bitcoin spot ETF launch.

(Deribit, CoinDesk Indices)
(Deribit, CoinDesk Indices)

Bitcoin options have been more efficiently priced over the period, too.  Perhaps team ether got too fat and happy off of collecting that implied vs. realized premium spread?

Need more color on what's happening in the markets? Check out these stories:

Edited by Aoyon Ashraf.


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Todd Groth, CFA

Todd Groth was the Head of Index Research at CoinDesk Indices. He has over 10 years of experience involving systematic multi-asset risk premia and alternative investment strategies.

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