Conclusion

• In the same time period, influenced by news and BTC price movement, LUNA experienced a 72% increase in value compared to the 30% of ETH. This huge increase also meant more volatility for LUNA. On average, LUNA price experienced twice as much volatility compared to ETH.
• Even though the volatility behaviors were generally similar, it differed a lot during between July 27-29. ETH price stabilized after an initial volatility following the Amazon news but the LUNA price kept getting more and more volatile as it rose. The price stabilized on the day it achieved its highest average value meaning that people believed LUNA was previously undervalued.

On average, LUNA price is more volatile but the volatility trends are generally similar. However, a big difference in the volatility movements starts to appear between July 27-29. ETH price volatility quickly dies down following the days after the Amazon rumor. On the contrary, LUNA volatility keeps rising and rising until it experiences a sharp drop on the 29th. I think this shows that BTC price fluctuations affect LUNA more strongly, increasing volatility. This can have good effects too. An example being the LUNA experiencing a 72% increase in value in a period of two weeks. I believe it also shows that the community believed LUNA was undervalued at $6.5 and was waiting for a positive mood to appear in the market.

Finally, lets take a look at the averaged daily volatility (multiplied by 100 for readability in table chart) for the tokens over the whole period. We can see that on average, LUNA has twice as much volatility compared to ETH.

We can see that the behaviors are similar on the 19th (Falling daily average price and high volatility) and 21st (Rising average price and really high volatility). Proving that these movements are influenced by the BTC price fluctuations. ETH price also steadily rises with low volatility in the period up to 26th.

ETH price and volatility experience a sharp increase on the 26th behaving similar to LUNA. However, LUNA price experiences a much stronger fluctuation. The ETH price volatility starts to die down after the 26th but the LUNA price volatility keeps increasing, peaking on the 28th.

Moving on, lets take a look at the volatilities side by side.

We can see that there are jumps in volatility on the 19th and 21st. The first one is day where the average price falls 6.8% compared to the previous day. BTC also lost value on the same day. Volatility being high means that the price fluctuated a lot instead of simply losing value and staying there.

The second is the start of a steady increase for the value of LUNA and for the whole crypto market. Since on this day BTC jumped from just around sub $30k levels to $32k and kept increasing its value in the following days. Initially, there is a lot of volatility on the 21st since people are not sure if the price increase is here to stay however as BTC kept rising in the following days, the LUNA price volatility gradually dies down and the daily average price keeps rising.

After a steady increase, the average price and volatility experience a sudden jump on the 26th. On this day rumors that Amazon was going to start accepting BTC as payment in the near future began to surge. This caused a sharp increase in the BTC price and other coin prices. We can see that average LUNA price jumped from $8.15 to $8.77. Afterwards, the prices fell a little bit when the Amazon denied the rumors. This uncertainty further raised the volatility of the price.

However, it seems like the users decided that even such a possibility would be good for the prices and that LUNA is currently undervalued. Because the after the volatility storm ends the average price of LUNA jumps 13% on the 29th and the volatility is low meaning that people agreed that the price should be around these levels.

Before we put them side by side lets check the daily prices and volatilities individually.

Prices and Volatility

Last 2 weeks has been a bull run for the crypto market. With BTC gaining around 30% value and breaking the $40k barrier once more, the market has been positive. In the same time frame ETH also followed with a 30% increase in value and LUNA outperformed both of them with a whopping 72% increase in value. We are going to take a look at the daily volatilities of ETH and LUNA but before we begin our analysis we need to set up some ground rules and explain term definitions.

Dataset

Prices of the tokens are sampled on an hourly basis over the last two weeks.

Terms

Standard Deviation:

A summary measure of the differences of each observation (Hourly USD price in this case) from the mean (Daily average price). It represents how much the data is spread out.

We might have used standard deviation to represent volatility however, standard deviation is calculated as a fraction of its mean, this means that it's not possible to appropriately compare two variables (Tokens) when there is a high difference between the mean value. We need to normalize first.

Normalized Standard Deviation:

The normalized standard deviation is just the standard deviation divided by the mean. The standard deviation is now independent of its units. Which means that we can now make healthy comparisons!

From now on, when I say volatility it is synonymous with normalized standard deviation. Now, lets start with our analysis.

Dataset and Definitions