Is Ethereum’s Underperformance a Short-Term Trend?
Despite the launch of Ethereum ETFs in the US, Ethereum continues to underperform Bitcoin. The recent launch of six futures-based ETH ETFs on US markets did not generate significant trading volume or provide the anticipated boost to the overall crypto market. Kaiko, a crypto research firm, analyzed this trend and attributed Ether’s weakness to prevailing market conditions, including a surge in risk-free rates and macroeconomic uncertainties. These factors have diminished interest in riskier assets like cryptocurrencies.
Why Did Ethereum ETFs Fail to Attract Trading Volume?
Kaiko noted that among the newly launched ETH ETFs, the two largest by trade volume struggled to achieve an average daily trade volume of just $0.5 million during their first week of trading. In contrast, the first Bitcoin futures ETF attracted over $1 billion in trade volume on its debut day. The firm believes that Ethereum’s underperformance is due to the ongoing impact of the bear market, which historically has seen traders turn to BTC, the oldest and largest crypto asset.
Are Institutions Still Interested in Ether ETFs?
Although ETH futures ETFs did not attract significant trading volume, they still provide a liquid, cost-efficient, and transparent way for investors to gain exposure to Ethereum. This could potentially alter institutional investors’ perceptions of ETH, which currently remains strongly correlated with BTC. Despite this potential for institutional interest, Ethereum’s price continues to underperform compared to the broader crypto market, with the ETH/BTC price ratio and volume on a downward trend over the past year.
Ethereum’s Performance Compared to Bitcoin
In recent weeks, Ethereum extended its losses while Bitcoin experienced a smaller decline. ETH lost approximately 7% over the past week and was trading at $1,569, while BTC only lost 2.22% and was trading at $27,401 during the same period.
Hot Take: Is Ethereum’s Underperformance Temporary?
Ethereum’s underperformance compared to Bitcoin and the lackluster response to the launch of Ethereum ETFs suggest that there may be short-term challenges for the cryptocurrency. However, it’s important to consider the potential impact of institutional interest and the liquidity provided by ETH futures ETFs. While market conditions and macroeconomic uncertainties continue to affect the performance of cryptocurrencies, it remains to be seen whether Ethereum can make a comeback in the near future.
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