Bitcoin's Volatility Decline Forces Traders to Look Elsewhere, Ethereum Becomes New Playground

Bitcoin's volatility has collapsed, forcing speculative traders to seek out Ethereum. Annualized volatility for Bitcoin has dropped to 38%, comparable to blue-chip stocks. Investors are turning to Ethereum, with its corporate-buying frenzy and higher volatility. The rotation reflects a shift towards long-term Bitcoin holdings and speculative trading in Ethereum.

In recent weeks, Bitcoin's volatility has significantly declined, prompting speculative traders to shift their focus to Ethereum. The annualized volatility for Bitcoin has dropped to 38%, comparable to that of blue-chip stocks, making it less attractive for traders seeking high returns. This shift in investor sentiment has led to a rotation towards Ethereum, which has seen increased corporate buying and higher volatility.

According to CryptoSlate [1], Bitcoin and Ethereum exchange-traded funds (ETFs) in the United States recorded nearly $1 billion in combined outflows on Aug. 19, extending a current streak of investor withdrawals. These outflows can be linked to the recent price corrections in the crypto market. Bitcoin price retraced from recent highs to as low as $112,000 during the last 24 hours, while Ethereum dropped over 8% in the past week to trade at roughly $4,200 at the time of reporting.

Bitcoin ETFs bore the brunt of the redemptions, losing $523 million in a single day, with Fidelity’s FBTC leading the retreat with $246.9 million in outflows. Ethereum ETFs saw similar pressure, recording $422.3 million in redemptions. Despite these significant reductions in their assets, the US-based crypto ETFs’ assets under management remain at record levels, with Bitcoin ETFs collectively managing $14.6 billion and Ethereum ETFs maintaining approximately $2.6 billion.

Mitrade Insights [2] reported that digital-asset investment products pulled in $3.75 billion last week, lifting assets under management to $244 billion on August 13. The bulk of the cash was funneled into a single iShares product, with Ethereum attracting the lion’s share of last week’s inflows at $2.87 billion, or 77% of the total. This brings year-to-date net inflows into ETH to about $11 billion, making up nearly 30% of assets under management, versus Bitcoin’s 11.6%.

The U.S. government’s crypto holdings, including seized assets across multiple tokens, have a total reported value of $23.4 billion, with Ethereum being part of a strategic digital stockpile. Recent transfers raised U.S. wallets to roughly $281 million in ETH, indicating ongoing on-chain activity. Ethereum has risen ~3% in 24h and ~17% month-to-date, according to CoinGecko data [3].

This rotation towards Ethereum reflects a shift towards long-term Bitcoin holdings and speculative trading in Ethereum. The decrease in Bitcoin’s volatility has made it less attractive for short-term traders, while Ethereum’s higher volatility and corporate buying frenzy have drawn investors seeking more significant price movements.

References:
[1] https://cryptoslate.com/us-bitcoin-and-ethereum-etfs-face-1-billion-outflow-amid-market-dip/
[2] https://www.mitrade.com/insights/news/live-news/article-3-1056518-20250821
[3] https://en.coinotag.com/u-s-holds-23-4b-in-crypto-including-bitcoin-ethereum-may-continue-price-recovery/