Persistently Higher Bitcoin Futures Premiums Suggest Ether’s Underperformance Will Continue
A recent report from K33 Research suggests that the persistently higher premiums on bitcoin futures indicate that ether will continue to underperform compared to bitcoin. The analysts believe that bitcoin’s status as digital gold in a risk-off environment, along with the potential for spot bitcoin ETFs, makes it more appealing than the DeFi and NFT-associated ether. Therefore, sticking to bitcoin until there is clear proof of a spark in ether is considered the safest exposure for now.
Spot Bitcoin ETFs and Market Reaction
The report also discusses the expectation that the Securities and Exchange Commission (SEC) will not appeal the Grayscale court decision regarding its application to convert its Grayscale Bitcoin Trust (GBTC) product to a spot bitcoin ETF. This decision could lead to a strong market reaction before attention turns to the next set of decision deadlines for delayed spot bitcoin ETF applications from other firms. Bloomberg Senior ETF Analyst Eric Balchunas predicts a high chance of approval for spot bitcoin ETFs by the end of this year or March 2024.
Ether’s Underperformance and Derivatives Market Outlook
In addition, the report highlights that ether, along with most altcoins, has underperformed in the spot market due to low trading volume and declining volatility for bitcoin. Ether’s underperformance against bitcoin has reached a 14-month low. Despite some positive indicators such as higher CME premiums and robust demand for call options, the derivatives market does not exhibit strong bullish sentiment. Offshore funding rates remain below neutral, and cautiousness is observed through bitcoin futures ETF outflows and traders struggling with stable market conditions.
Hot Take: Ether’s Challenges in Catching Up with Bitcoin
While bitcoin continues to dominate the cryptocurrency market, ether faces challenges in catching up. The persistent higher premiums on bitcoin futures indicate that investors still find bitcoin more attractive, especially in a risk-off environment and with the potential for spot bitcoin ETFs. Ether’s underperformance in the spot market, along with cautiousness in the derivatives market, adds to its struggles. However, as the cryptocurrency market evolves and new developments arise, there is still potential for ether to spark a significant rally and close the performance gap with bitcoin.
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