Bitcoin Faces Volatility Amid Trade Optimism as Ethereum Gains Momentum Post-Pectra Upgrade

COINOTAG News reported on May 13th that QCP has issued its latest market observation, highlighting a pivotal development: a temporary tariff reduction agreement between China and the United States. This news ignited a robust rally in risk assets, propelling the U.S. stock market to a 3% gain at the onset of trading, as investors anticipate a resurgence in cross-border trade. Meanwhile, traditional safe-haven assets like gold experienced a nearly 3% drop immediately following the announcement, although it later trimmed its losses. The market landscape appears to be reverting to established macroeconomic trends, characterized by a stronger U.S. dollar, escalating bond yields, and diminished gold prices, leading to a general selling pressure across asset classes.

The volatility index, or VIX, decreased to 18, resulting in a compression of over 5 volatility points in Bitcoin’s front-end. Initially, both Bitcoin and Ethereum saw price dips post-announcement, now stabilizing around $103,000 and $2,400, respectively. Interestingly, Bitcoin’s market dominance slipped below 63%, with Ethereum showing signs of outperforming. The cryptocurrency remains embroiled in a dual identity crisis—caught between its perception as “digital gold” and as a proxy for risk assets. As macroeconomic narratives transition from protectionism to a focus on trade optimism, Bitcoin’s trading range may also experience constraints.

This shift in macro conditions could significantly influence derivative flows, with protracted investment cycles typically enhancing demand for back-end options and mitigating the need for front-end put option hedging. In contrast, Ethereum’s funding rate remains stable, suggesting that its recent price movement is not fueled by excessive speculation. The surge above $2,400 coincided with the much-anticipated introduction of the Pectra upgrade, which has sparked a resurgence in longer-term option interest, potentially marking Ethereum’s evolution into a formidable asset allocation in the cryptocurrency market.