Why Ethereum and Bitcoin are negatively correlated

Over the past few weeks, the price fluctuations of Ethereum and Bitcoin have been negatively correlated.

We can clearly see from the price trend chart that there is a close connection between the prices of Ethereum and Bitcoin: when the price of Bitcoin rises, the price of Ethereum falls, and vice versa.

(The prices of Ethereum and Bitcoin are not always negatively correlated. Source: Golden Finance)

Although the prices of Ethereum and Bitcoin are not always negatively correlated, at least they are currently.

Even Analogies <br/>The Ethereum network is completely different from the Bitcoin network, whether in terms of structure, monetary policy, vision, or philosophy behind it. Bitcoin developers want it to be a digital gold and cash system. Ethereum, on the other hand, was developed only to supplement decentralization. In essence, Bitcoin is a digital currency, while Ethereum is just a decentralized network.
Many Bitcoin and security experts, including Andreas Antonopoulos, have commented on the relationship between Bitcoin and Ethereum. Antonopoulos wrote in 2016:

“Stop calling Ethereum a ‘rival to Bitcoin.’ No one on Ethereum or Bitcoin sees the two as competitors. There is no zero-sum game between post-national currencies.”

To some extent, Ethereum developers and businesses rely on the Bitcoin network to maintain stability and security. Ethereum puts flexibility and practicality first, which can provide developers with a more efficient ecosystem. But Bitcoin is different. Bitcoin is a better way to store value.
For example, blockchain innovation companies often hedge Ethereum funds raised through ICOs into Bitcoin in order to improve financial stability. Given that Bitcoin's price volatility is much lower, startups prefer to store their funds in Bitcoin in hardware wallets such as Trezor or cold storage.

(The relationship between Bitcoin and Ethereum source: Golden Finance)

Bitcoin expansion controversy <br/>Recently, the Bitcoin community has not been able to reach a consensus on what solution should be adopted for Bitcoin network expansion, and some Bitcoin users have turned to the Ethereum network. Some analysts, including Social Minds founder and Reality Keys developer Edmund Edgar, even believe that this alternative payment method is feasible given that Ethereum's transaction fees are very fixed.
In the Ethereum network, transaction fees are called "gas". If a user wants to initiate a smart contract or send a transaction request, he needs to pay a certain amount of gas. Edgar said that unlike Bitcoin, Ethereum's transaction fees are fixed and will not change due to changes in transaction size.
Edgar explained:

“Users’ accounts can be treated as… a type of account. Users have individual balances, and the number of payments made is not tied to the balance. Wallets are even simpler, there are fewer unexpected events, and fees are predictable and explainable. No matter where the funds come from, the fee for every payment is the same.”

Chris Burniske, head of crypto products at ARK Invest, further pointed out that investors like to switch back and forth between Ethereum and Bitcoin, converting to whichever performs better in the market.

3/ "Correlation != Causation" & Although these are short-term data, we can still see that investors like to swing back and forth between Bitcoin and Ethereum.

Ethereum to Bitcoin Trading Pairs <br/>Ethereum developers and businesses are increasingly interested in Bitcoin users. This view is confirmed in the global Ethereum exchange market: Ethereum to Bitcoin trading pairs account for half of Ethereum transactions.