Will Ethereum Overtake Bitcoin After the Launch of ETFs?
Contributor
- Market trends favor Ethereum as ETF launch nears.
- The report showed a changing landscape in spot trading volumes, options, futures, and perpetual contracts.
Cryptocurrency markets have experienced high volatility over the past two months. Market preferences are shifting, especially since the SEC approved Ethereum [ETH] spot ETFs in May.
With the expected launch of ETH spot ETFs, investors are becoming increasingly optimistic.
Although ETH ETF trading has not yet begun, a report by Kaiko and a joint report by Block Scholes and Bybit showed changing market preferences.
A Trend Reversal
According to the recently released report by Block Scholes and Bybit, there has been a massive landscape shift in spot trading volumes, futures, options, and perpetual contracts.
The report posited that Ethereum enjoyed a better volatility premium over Bitcoin [BTC]. This is mainly due to increased address activity and a positive change in market sentiment towards ETH.
Source: Blockscholes & Bybit
Ethereum is catching up to Bitcoin
The ETH to BTC ratio has maintained a positive value of 0.05 since the spot ETFs were approved. This ratio is considerably higher than the pre-approval values of around 0.045.
The higher ratio shows that when trading on ETH spot ETFs begins, they will continue to outperform BTC.
Source: Kaiko
General market sentiment
ETH has gained more than BTC in several areas since the ETH spot ETFs were approved in May.
Although the crypto market experienced high volatility over the past two months, ETH futures have shown more resilience and recovered faster than Bitcoin’s open interest.
ETH’s faster recovery for its future indicates an increasingly positive sentiment as many investors have confidence in its future.
Source: Blockscholes & Bybit
ETH’s trading volume has maintained the same range since May. According to Kaiko, ETH liquidity has been maintained at a depth of 1% and a steady range of $250 million.
The ETF approval seems to have changed the trend after the dip below $200 million and reversed the trend after SEC approval. Therefore, ETF anticipation has played a crucial role in improving liquidity.
Source: Kaiko
In addition, ETH perpetual contracts have experienced increased trading volume. The increase showed that investors were willing to pay a premium to hold long positions, showing confidence in the future potential of cryptocurrencies.
As reported by Kaiko, implied volatility has increased sharply over the past seven days. For example, ETH options expiring this Friday rose from 53% on July 13 to 62% at press time.
Read Ethereum [ETH] Price Prediction 2024-25
The rise in these contracts implied that investors were paying short positions to protect themselves from price increases in the short term.
This market sentiment shows considerable optimism about ETH’s future, especially in light of the upcoming ETFs this week.
Source: Kaiko
