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Volatile Ethereum Draws Trader Interest
Originally posted 19 Mar 2016 by
Bitcoin prices traded largely between £283 and £290 during the week between 11th and the 18th of March, as 30 million Bitcoin was traded on the exchanges globally. The digital currency’s price movements hald calmed down a lot, starting the week out at £287 on 11th March before breaking through the £290 level. For the remainder of the week through, the digital currency remained range-bound between £283 and £290.
The modest price movements may have been overshadowed by the unforeseen exposure given to ether, the token that powers the Ethereum blockchain. Ether, which has been generating significant exposure, experienced high volatility during the week; the development is notable as ether serves as a way to run applications and services on the Ethereum blockchain and is not positioning itself as a store of value.
Ethereum released Homestead, the first version of its software, due to Ethereum’s success in attracting investors, many members of the Bitcoin community believe that ether is becoming a great way for people to hedge their risk against the volatility of Bitcoin. The Bitcoin community is currently at odds with the uncertainty caused by perceived issues about the size of its processing capacity, with many arguing the protocol needs to be upgraded to accommodate a larger number users and other people proposing improved networks that would build on its stability. Amid this standpoint, Ethereum is "emerging as a strong hedge against Bitcoin," digital currency expert Joseph Lee said Lee, founder of Bitcoin derivatives trading platform Magnr, emphasized that earlier this month, many Bitcoiners were "buying ether to profit from its current state of renewed interest."
Despite the increased attention, however, ether trading remains in its infancy, with a large majority of the exchange trading currently takes place on Poloniex a US-based exchange, though other market players Coincheck and Bitfinex have recently added offerings. Bitcoin stability Yet, while Ethereum may be appealing to digital currency traders with a higher appetite for risk, there are many who view Bitcoin's relative stability over the past week as a positive sign.
Christopher Burniske, analyst at the investment management firm Ark Invest, noted that Ethereum peaked around it's time of launch, and that its price had since fallen as early adopters sought to cash in on the new attention. "Now that ether is down about 40% from its all time high, and still falling, it’s interesting to see Bitcoin holding its price. I would have expected to see a bit more of a pop," he said. And prior to today's decline, Bitcoin has had a steady week, rising about 1%. Market observer George Samman also said that the Bitcoin market, to some extent, benefits from a more active market for Ethereum. “The thing that I look at though is how are people cashing out of Ethereum, really there is one major way and that's through Bitcoin, so if you want to sell out of Ethereum for fiat you need to go through Bitcoin and vice versa to buy,” Ether's volatile beginning By contrast, $56.9m worth of the ether digital asset was transacted during the period ending on the 14th of March. Trading volume has increased sharply this month, especially when compared to February, having reached a 24-hour volume of $57.6m on the 6th of March. Amid this robust trading volume, Ethereum plunged from a weekly high of 0.036 Bitcoin on the 13th of March to a weekly low of 0.021 Bitcoin on the 18th of March. This decline represented a 41.7% drop! Like most of us in the Bitcoin community, we are really excited about ether but we strongly advise you do your homework before looking to invest your money!
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