Spot Ethereum ETFs Approved for Trading
Following recent adjustments to registration statements, several spot Ethereum ETFs have received approval for trading starting this week. Despite this development, Ether’s price has remained relatively stable so far.
Market Sentiment Shifts
According to insights from Kaiko, the upcoming days could see the crypto asset react to inflows from spot ETFs, especially considering the lukewarm response to futures products in late 2023. Traders are bracing themselves for potential market volatility and different outcomes.
- Kaiko predicts Ether to be “sensitive” to inflows from spot ETFs
- Traders preparing for various scenarios amidst uncertain market conditions
Market Braces for Volatility
Will Cai, Kaiko’s head of indexes, highlighted the lackluster demand for futures-based Ethereum ETFs launched in the US previously. Now, focus has shifted to the introduction of spot Ethereum ETFs, with expectations of swift asset accumulation and market reactions.
- Attention now on the launch of spot Ethereum ETFs
- Ether price could be influenced by initial inflow numbers
After a brief surge in May following the approval of the 19b-4 rule, Ether’s price has been on a downward trend. In March, it tested levels around $4,000 coinciding with Bitcoin’s peak performance.
Over the weekend, Kaiko observed a spike in Ether’s implied volatility, indicating traders’ uncertainty leading up to the ETF launch. Traders are hedging their bets by paying higher premiums, reflecting caution in the market.
- Implied volatility on Ether contracts surged over the weekend
- Traders less confident about the ETF launch
Interestingly, the uptick in implied volatility occurred before President Joe Biden’s withdrawal from the race, emphasizing its correlation with ETF launches rather than political events. Implied volatility for contracts expiring in August and September remains elevated.
Anticipation of ‘Sell the News’ Event
The market’s current state of uncertainty and heightened expectations suggests that traders are preparing for various outcomes, including the possibility of a “sell the news” event. This sentiment is backed by QCP Capital, indicating a cautious stance among traders.
- Traders speculated about a potential sell-off following news of ETF launches
- The lack of positive market reaction seen as a negative signal
Pseudonymous crypto analyst ‘Kaleo’ also predicted a probable pullback post the spot ETF debut, foreseeing a potential drop in Ether’s price below $2,800 before price discovery.
Hot Take: How Will the Market React?
As the market braces for the introduction of spot Ethereum ETFs, uncertainty and anticipation of potential volatility prevail. Traders are cautious about the possible outcomes, including a speculative “sell the news” event. The upcoming days will be crucial in determining Ether’s price movements and trader sentiment.
Sources:
– “>Kaiko Research Report
– “>QCP Capital Market Update
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