The Potential Impact of Upcoming Ethereum Futures ETFs

The Potential Impact of Upcoming Ethereum Futures ETFs

3 min read

The price of Ethereum has been hovering around yearly lows in comparison to its dominant counterpart, Bitcoin. Since September 2022, Ethereum has seen its value plummet to as low as $1,594. Yet, amid this decline, there are indications of a potential reversal in the offing, as suggested by the latest insights from crypto research firm K33 Research. Could it be because of upcoming ethereum futures ETFs?


Understanding the Ethereum Price Decline

K33 Research has been closely monitoring the ever-evolving dynamics between Ethereum and Bitcoin. Their recent findings shed light on a discernible shift in market sentiment towards these two cryptocurrency giants.

Ethereum’s native token, Ether (ETH), has been under immense pressure, trading at approximately 0.06 Bitcoin. This trend can be traced back to a pivotal moment in Ethereum’s history – the transition from proof-of-work to proof-of-stake consensus, famously known as “The Merge.” However, Ethereum’s trajectory is not solely a result of its internal changes; external market factors have also played a significant role. The DeFi (Decentralised Finance) and NFT (Non-Fungible Tokens) sectors, which once buzzed with activity, have seen a wane in interest, indirectly affecting Ethereum’s performance.

Lunde, a Senior Analyst at K33, along with Vice President Anders Helseth, offered their insights on this scenario in their recent report. They noted that “Ether has experienced a steady downward trend throughout the year as DeFi and NFT activity has faded. Without any meaningful narratives or adoption stories, Ether has struggled to maintain strength versus Bitcoin.”


Market Sentiments and Potential Catalysts

Furthermore, the sentiment among Chicago Mercantile Exchange (CME) derivative traders appears bearish toward Ethereum. Despite a noteworthy 60% surge in open interest since August, the gap between ETH futures prices and its spot price remains significantly narrower compared to Bitcoin.

Lunde and Helseth interpret this data as an indication that CME Ethereum traders have not yet embraced the possibility of ETH futures ETFs gaining approval in the coming weeks.

However, the Ethereum landscape isn’t entirely bleak. Despite the prevailing bearish sentiment, analysts at K33 remain cautiously optimistic about a turnaround as the year draws to a close. According to their report, the potential approval of new Ethereum futures-based Exchange Traded Funds (ETFs) could potentially reverse this downward trend.

Meanwhile, Bloomberg analysts, quoting undisclosed sources, have stated that Ethereum Futures ETFs could commence trading in the United States as early as next week, spurred by the SEC’s interest in accelerating their launch. There are currently 15 Ethereum futures ETFs from nine issuers awaiting approval.

These issuers, including VanEck, ProShares, Grayscale, Volatility Shares, Bitwise, Direxion, and Roundhill, are all vying to introduce Ethereum futures or hybrid ETF products. The analysts have assigned a 90% probability for the launch of these Ethereum futures ETFs in October, with Valkyrie’s Bitcoin futures product (BTF) anticipated to be the first to provide exposure to Ethereum, starting on 3 October.


New Ethereum Participants

The introduction of such financial products could inject new vitality into the crypto market, potentially attracting more institutional interest and driving Ethereum’s value relative to Bitcoin. If approved, these ETFs could not only bolster the confidence of existing investors but also entice new participants to explore the Ethereum platform.

It’s worth noting that the enthusiasm for crypto futures products is not as fervent as that for their spot-based counterparts. The United States has already witnessed the launch of Bitcoin futures ETFs in 2021, which have enjoyed considerable attention.


Evaluating the Current Market

In recent days, both Ethereum and Bitcoin have experienced losses. Ethereum’s price has dipped by 2.1%, settling at $1,591, while Bitcoin has declined by 3.7%, with its current price standing at $26,212 at the time of writing.

The crypto landscape is undoubtedly witnessing a challenging period, particularly for Ethereum. However, the potential approval and introduction of Ethereum futures-based ETFs in the United States could serve as a turning point. These financial products have the capacity to reignite interest in Ethereum, attracting both institutional and retail investors and potentially altering the balance of power between Ethereum and Bitcoin in the cryptocurrency market. As we await the SEC’s decision and the subsequent developments, the crypto world remains poised for transformation.


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