- The risk vs. reward for Ethereum actually looks more attractive than that of Bitcoin.
- With the reduced risk, a whale has bought over $435M ETH over the last two weeks.
Ethereum [ETH] bounced back to the $2,500 level after a sharp sell-off triggered by geopolitical fears.
However, the crypto markets have a tendency to rebound after sharp drops, and ETH was no exception, edging ahead of Bitcoin [BTC] in terms of percentage recovered.
Attractive risk vs. rewards
Naturally, investors seemed more willing to engage at these levels—and for good reason.
The neutral-to-positive sentiment was observed when it came to Ethereum with regard to two important measurements.
The Sharpe Ratio chart indicated that the risk-adjusted returns of ETH started moving up after a long decline. This indicated the improving performance of the asset to its volatility.
That implied ETH was delivering better rewards per unit of volatility, even amid sideways price action.
In parallel, the Normalized Risk Metric (NRM) hovered at 0.41. Historically, this value has marked a moderate risk environment, far from euphoric peaks.
Source: Alphractal
Additionally, the multi-color band on the chart indicated that ETH is floating within the 0.5 NRM region. The region has been traditionally quite a balanced zone in terms of accumulation and not panic or euphoria.
Taken together, these indicators suggested a silent period in the Ethereum cycle, well away from the speculative excess, but with a structural investor belief.
By forcing volatility down and enhancing risk-reward, Ethereum was emerging as a more stable coin than Bitcoin.
Will ETH reverse and outpace BTC?
However, not all signals were calm.
ETH registered a sudden 19% drop in Open Interest on Binance, alongside a sharp price correction from $2,800 to sub-$2,500.
This pointed to mass liquidations and long squeezes, flushing leverage from the market.
As fear creeps back in, such flushes have been followed by spells of recovery, particularly as excess leverage moves out of the system.
As risk-to-reward statistics on ETH were still positive, past cycles indicated a possibility of upside after liquidation.
Source: CryptoQuant
Nevertheless, a turnaround could only be confirmed by continuously regaining the lost support areas on a volume basis.
It is possible that ETH could outperform BTC in the third quarter, yet any type of recovery is dependent on the stabilization of macro-sentiment and institutional flows.
