Several analysts remain optimistic about Ethereum’s long-term prospects. A study by Kaiko suggests that ETH could outperform Bitcoin following the launch of Ethereum spot ETFs, which could happen as early as next Tuesday.
Could ETH Overtake BTC After Next ETFs Arrive?
Since the approval of Ethereum spot ETFs by the United States Securities and Exchange Commission (SEC) in May, enthusiasm seems to have given way to impatience in the cryptocurrency market. Nearly 2 months have passed without these new financial products having deigned to see the light of day, and the price of Ether (ETH) has lost almost 20% of its value over the period.
Despite this correction, A study by Kaiko suggests that ETH could outperform Bitcoin following the potential launch of Ethereum spot ETFs next Tuesday.
Indeed, the ETH/BTC ratio, which measures the relative performance of the 2 cryptocurrencies, remains high at around 0.05, a level significantly higher than before the approval (0.045). This trend suggests that ETH could continue to outperform Bitcoin after the launch of the Ethereum spot ETFs.
Figure 1 – Evolution of the ETH / BTC ratio
Moreover, Market liquidity remains at a solid level. ETH's 1% Market Depth, an indicator of the amount of available buy and sell orders, has remained around $230 million since May.
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This figure is promising, especially since trading volumes tend to be lower during the summer months. The arrival of spot ETFs could further improve ETH's liquidity, as was the case for Bitcoin after the launch of Bitcoin spot ETFs in January.
Figure 2 – Evolution of Ether market depth
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Liquidity still present on Ethereum
While spot markets have shown some resilience in the face of the June correction, Perpetual futures contracts, on the other hand, have seen a sharp decline.
Financing rates, which compensate longs for the risk taken by short sellers, have halved since May, according to Kaiko’s report. The trend shows a decline in conviction among traders, who are less willing to pay high premiums to hold long positions.
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Uncertainty over the exact launch date of Ethereum spot ETFs could explain this change in mood. Open interest in ETH perpetual futures contracts has also declined by about $11 billion from June highs seen after the SEC approval.
Figure 3 – Evolution of open interest on Ethereum perpetual contracts
On another side, Implied volatility observed on short-term options contracts increased sharply last week. This means that traders are willing to pay more to hedge against volatile price movements, especially as the launch date of the Ethereum spot ETF approaches.
Figure 4 – Evolution of Ether implied volatility
From the chart above, the spike in implied volatility suggests some level of uncertainty among traders, but could also reflect anticipation of further price increase on ETH once Ethereum spot ETFs are launched.
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Source: Kaiko Research
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