Bitcoin Flattens as Ethereum Records First EVER Deflationary Month

Eth shooting through space

For the first time in 2 years, the volatility of Bitcoin has dropped below that of the Nasdaq and S&P 500 stock market indexes. 

With a strong US dollar, high inflation, and growing interest rates plaguing all risk-on assets, Bitcoin has shown exceptional stability over the last 20 days. 

As market participants look to shield themselves from economic turmoil, Ethereum enjoyed its first-ever deflationary month, burning through over 49,000 ETH coins.

Finally, the creators of XRP, Ripple, celebrated a 10-year anniversary alongside securing new documentation that could significantly change the SEC lawsuit.

  • Bitcoin volatility falls below NASDAQ & S&P 500 for first time in 2 years
  • Ethereum records first ever deflationary month
  • Ripple celebrates 10-year anniversary as SEC lawsuit progresses forward

Bitcoin volatility falls below NASDAQ & S&P 500 for first time in 2 years

As the world battles economic turmoil, a new report highlights Bitcoin’s current relative stability in comparison to sliding stocks. 

A report published by Kaiko, a digital asset data provider, compared the 20-day realized volatility of different asset classes. 

The report indicated that the volatility of the world’s leading cryptocurrency had now fallen below the popular indices of the NASDAQ and S&P 500. The difference between the 30-day and 90-day realized volatility charts has also been closing since the middle of September.

20-day realized volatility of Bitcoin vs the Nasdaq and S&P 500.

Bitcoin has remained more volatile than the stock market for over 2 years. However, uncontrollable inflation, increasing interest rates, and a strong US dollar have plagued stocks.

According to Kaiko’s Director of Research, Clara Medalie, “BTC volatility has been falling since early July. On the other hand, stocks have seen volatility increases due to a range of factors including high-interest rates, an appreciating dollar, persistent inflation, the energy crisis, and war.”

The Federal Reserve has implemented three consecutive 0.75% interest rate hikes in 2022 to combat the rising inflation. However, many market participants believe the peak of interest rate hikes has not yet been seen. Investors look to November 12th when the next interest rate hike will be decided.

Due to the differences in volatility, the correlation between Bitcoin and stocks has also started to diminish. At times throughout the past year, Bitcoin’s correlation with US stock market indices has been incredibly high, reaching +0.93 during some months.

However, according to IntoTheBlock’s Correlation Matrix, Bitcoin’s correlation with the S&P 500 is currently 0.27. The closer to 0, the less correlation there is. 

Historical correlation between Bitcoin and a range of different assets.

Ethereum records first ever deflationary month

One of the most debated aspects of the Ethereum Merge was the effect that a Proof-of-Stake network would have on the issuance of ETH

Many were hoping that ETH would become a deflationary asset straight away; leading to a reduction in the supply of ETH with time. 

Post the Merge, the dream of deflation dwindled as the supply rate of ETH increased throughout the remainder of September. 

However, with a growing burn rate and continuing low daily issuance, on October 22nd, ETH recorded its first 30 deflationary days in history.

According to data shared by Ultrasound.money, since October 8th, the burn rate of ETH has continually surpassed ETH issuance, which means the total circulating supply of ETH has been reducing. 

To be precise, 49,562 ETH have been burnt over the last 30 days. 

As a result, the total supply of ETH appears to have hit a peak in early October and is now days away from falling below the total supply that was available on the day of the Merge.

Approximately 3.318 ETH is burnt per day. According to Ultrasound.money, Uniswap, OpenSea, and Tether are the service providers that currently burn through the most ETH.

The burning mechanism for ETH was first introduced by Ethereum Protocol Improvement (EIP) 1559. EIP 1559 allowed a base fee to be burnt for each transaction, which can change depending on the congestion of the network. 

In addition to the burning mechanism, the Merge reduced the daily issuance of ETH by 90%. As a result, ETH investors have been waiting to see if new supply and demand dynamics would lead to a deflationary asset.

The supply of ETH since the Ethereum Merge.

Ripple secures game-changing document for SEC lawsuit

On Friday last week, Ripple Labs Inc, the creators of XRP and the XRP Ledger, celebrated its 10-year anniversary. 

Celebrated at the company’s All Hands meeting, members of staff including the company’s CEO, Brad Garlinghouse, tweeted about the historic occasion. 

Garlinghouse explained that he was “thankful for every day with this incredible team and the privilege to be Ripple’s CEO.” 

The Vice President of Corporate and Strategy, Emi Yoshikawa echoed Garlinghouse’s sentiment by stating that she was “so excited for what the next 10 years will bring!”

The company continues to push towards its goal of becoming the global remittance provider. On-demand liquidity volumes have grown considerably over the company’s 10 years, showing a 9x year-on-year growth. 

Alongside business growth, the company continues to make headway in its court case against the SEC. Last week, Ripple successfully acquired a copy of a speech given by former SEC official, William Hinman.

In the speech, Hinman claims that Ethereum is not a security, which should help Ripple to prove that XRP should be treated equally. According to Ripple’s counsel, Stuart Alderoty, the speech from Hinman is pivotal in proving that the same rules should apply to XRP.

According to a tweet published by the counsel, “Over 18 months and 6 court orders later, we finally have the Hinman docs (internal SEC emails and drafts of his infamous 2018 speech). While they remain confidential for now (at the SEC’s insistence), I can say that it was well worth the fight to get them.”

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