Report: Why will ETH rise much more than BTC in the next bull market?

New York-based digital asset research firm Delphi Digital recently released an in-depth report on Ethereum. The report mentioned Ethereum's native token ETH and said that if we have the next bull run, the price increase of ETH is likely to exceed BTC.

Page 12 of the Delphi Digital report talks about High Beta Risk-Reward. Beta Coefficient is a tool for assessing the systematic risk of securities, used to measure the volatility of a security or a portfolio of investment securities relative to the overall market. It is commonly seen in investment terms such as stocks and funds. For ETH, similarly, β is a technical indicator related to volatility. The report reads:

“ETH has also been significantly more volatile than BTC over the past six months. ETH’s 90-day Beta relative to BTC is currently at 1.5, significantly higher than its historical average (despite ETH’s relatively short history).”

Generally speaking, crypto assets tend to move in the same direction, meaning that cryptocurrencies tend to follow Bitcoin's price movements as a whole. According to LongHash, this phenomenon has become more pronounced recently, as the correlation between altcoins and Bitcoin prices has reached an all-time high, and this correlation is persistent. It is now difficult to find an altcoin that does not follow Bitcoin's price movements in a relatively volatile manner.

ETH has also been following the price action of Bitcoin in general in recent times. Comparing ETH's beta when it's rising and falling, we can see that for most of the past 18 months, ETH has been more volatile when BTC's price is falling than when it's rising. However, we are starting to see ETH's beta increase when it's rising. Given the high degree of correlation within cryptocurrencies, we can predict that, at least in the short term, if the market rebounds, ETH is likely to rebound more than BTC.