The price of bitcoin appreciated nearly 4% for the week ending 27th May, but the figure is perhaps not indicative of the wild trading action the market saw during the period.

Such movements came as market observers are becoming more interested in the relationship between bitcoin, the token supporting the world's longest-running blockchain, and ether, the token for the Ethereum platform.

Bitcoin's gains, for example, came as ether prices plunged sharply, but it made this climb amid modest trading volumes. By contrast, ether enjoyed robust transaction activity, a sign that points to a potential migration of traders away from bitcoin.

Many market observers are beginning to suggest that these two digital currencies display a negative correlation. Since they both have their respective strengths and weaknesses, and each is publicly traded, experts have begun weighing in on the value of each as an investment.

This perceived competition may not be over any time soon, and one market watcher emphasized that both currencies have quite a bit of potential.

"It is still early to call the winner at this stage," Toya Zhang, senior PR Manager for OKCoin, told CoinDesk.

While developers have created many cryptocurrencies, bitcoin was the first one to reach scale – but some are beginning to think that this state of affairs might change.

Tim Enneking, chairman of cryptocurrency investment manager EAM, said:

Ether, which operates at a far smaller scale than bitcoin, does not currently face such challenges. Further, supporters have asserted that ether has far more flexibility and potential than bitcoin, as Ethereum is proving capable of supporting a broader range of applications than bitcoin’s code.

However, ether has done far less to prove itself than bitcoin, as the latter currency has long dominated the space. If a digital asset wants to achieve widespread adoption, this "requires continuous progress," Zhang continued.

While any forward-looking predictions are purely speculative in nature, hard data – involving both price movements and volumes – can provide a better understanding of market activity.

Over the week, bitcoin prices rose 3.9% from $436.73 at 12:00 UTC on 20th May to $453.82 on 27th May, CoinDesk USD Bitcoin Price Index (BPI) figures reveal.

However, the digital currency’s price fluctuated between $440 and $450 for most of the week until Friday. These fluctuations coincided with lackluster volume of 7.6m BTC during the seven days through 12:00 UTC on 27th May.

"Bitcoin trading volume is flat," Petar Zivkovski, director of operations at full-service bitcoin trading platform Whaleclub, told CoinDesk at the time.

He added:

However, this soon changed, as observers reported a sharp decline in short positions that caused the subsequent price breakout that reached highs not seen since last fall. At press time, bitcoin is trading at $473.20.

Ether prices, by contrast, declined 14% during the seven days through 12:00 UTC on 27th May.

While the digital currency began the period at $14.31, it ended a week of trading by falling well below $12 per ether at press time. These price movements took place as ether’s day-end, 24-hour trading volume fluctuated significantly.

The week started out strong, with volume of $53.8m at 23:59 on 19th May, CoinMarketCap figures reveal. However, this measure fell to as little as $17.9m at 23:59 on 22nd May and finished the week at $20.7m.

The currency’s recent drop – and bitcoin’s rally – can be attributed to market participants front-running The DAO’s raising of money, claimed George Samman, a blockchain advisor and consultant.

Samman argued that market participants sold their ether holdings after the recent rally, purchasing bitcoin soon after.

Such speculations, while unconfirmed, nonetheless remain indicative that market participants are beginning to more closely scrutinize the nature between the two markets.

Was ether's loss bitcoin's gain? That answer remains elusive, though the search for connections between the two markets has certainly begun in earnest.

Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.

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