Ethereum Futures ETFs Perform Poorly, Analysts Suggest Rotating Back into Bitcoin
According to analysts at K33 Research, the lackluster performance of nine new Ethereum futures exchange traded funds (ETFs) has led them to recommend a “rotate back” into Bitcoin. In their market report, the analysts noted that the initial trading volume of Ether futures ETFs was only 0.2% of what the ProShares Bitcoin Strategy ETF amassed on its first day of trading in October 2021. While this was expected due to the different market conditions during their respective launches, the underwhelming numbers missed expectations. This lack of institutional appetite for Ether ETFs has caused one analyst to retract his previous advice of increasing ETH allocation.
Lessons from the ETH Futures ETF Launch
The launch of ETH futures ETFs provides an important lesson in evaluating the impact of easier access to crypto investments for traditional investors. According to one analyst, increased institutional access will only create buying pressure if there is significant unsatiated demand. However, this is not currently the case for ETH. The majority of the crypto market lacks meaningful short-term price catalysts and is expected to continue sideways. Therefore, Bitcoin remains favorable with potential ETF approval and a halving event on the horizon.
A Bearish Sentiment for Crypto Assets
Ben Laidler, global markets strategist at eToro, shares a similar outlook for crypto assets but with a slightly more bearish sentiment. He believes that current macro trends, such as rising oil prices and the actions of the Federal Reserve, could trigger a downward movement in prices for mainstay crypto assets like Bitcoin. As we are in the late stage of the rate hike cycle, further positive news is needed to sustain market sentiment.
Hot Take: Shift from Ethereum to Bitcoin Expected
Given the underwhelming performance of Ethereum futures ETFs and the lack of short-term price catalysts in the crypto market, analysts are suggesting a shift from Ethereum to Bitcoin. The institutional appetite for Ether ETFs is currently low, while Bitcoin has potential upcoming events that could drive its price. However, macro trends and rising oil prices may pose a risk to the overall crypto market sentiment. It remains to be seen whether this shift will materialize in the coming months.
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