Who is the Best ETH Beta?
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Who is the Best ETH Beta?
Perhaps leveraged ETH is the best ETH beta.
Navigating Web3 tides with focused insightsAuthor: 563
Compiled by: TechFlow
You'll hear a lot of discussion about "Ethereum beta" on the timeline, but what's just noise and what's actually beta? I looked into last year's data and found the following.
First, some caveats:
I only considered projects that have existed for over a year. Yes, there may be newer projects that fit the "ETH beta" category, but there isn't enough data yet for proper analysis.
I examined:
I also included $BTC as a control.
First, correlation
Correlation refers to how much price movement in asset A can be explained by price movement in asset B.
The higher the correlation (closer to 1), the more synchronized the price movements are.
Some observations:
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Both ETH scaling and LSD tokens show decent correlation with ETH.
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Overall, ETH and BTC show the highest correlation, which is not particularly interesting.
We see that more volatile assets (memes, applications) score lower because their price movements are more extreme.
In my view, correlation analysis doesn't tell the whole story. When people talk about wanting "ETH beta," they're usually looking for altcoins that outperform ETH on "green" (up) days (and/or underperform more on ETH "red" (down) days). Let's examine this next.
By separating "green" and "red" days, we can check whether these other coins' price changes are larger than ETH's.
We can also look at average multiples of price change relative to ETH. For example, if ETH moves +1%, we can see that BTC on average moves +1.22% per day.
From this perspective, we find that $PEPE stands out the most during ETH up-days, averaging 6.48x ETH's price movement (i.e., when ETH averages +1% on an up-day, PEPE averages +6.48%).
Next come $OP, $ENS, and $LDO, which have respectable multiples but significantly lower "hit rates" compared to $PEPE.
This analysis surprised me quite a bit. PEPE's use as an ETH beta has been discussed before, but I didn't expect it to be the clear winner.
Notably, it's the newest among the tokens studied. Perhaps other (newer) tokens would be strong contenders?
Finally, there's still a lot of noise in the data—$PEPE appears to be the best choice, yet it still underperformed ETH on 35% of ETH's up-days. Maybe leveraged ETH is the best ETH beta after all.
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