In recent months, the world of finance has witnessed a revolutionary development with the advent of Ethereum Exchange-Traded Funds (ETFs), sparking a frenzy of Fear of Missing Out (FOMO) among mainstream investors.
Ethereum, the second-largest cryptocurrency by market capitalization, has long been hailed for its decentralized blockchain and smart contract capabilities. With the introduction of ETFs focused on Ethereum, traditional investors are finding new avenues to engage with the rapidly evolving digital asset landscape.
Ethereum ETFs cause a buzz
According to crypto market analysts, “Tradfi” might start to reappear in the ETH ETF market. According to a recent report by Reflexivity Research, the annualized basis for CME has risen by more than 18% on a consistent basis.
Bitcoin’s open interest in CME has exhibited a consistent upward trajectory, exceeding $4.5 billion since the initiation of this trend two months ago. Significantly, an intriguing trend has surfaced when examining the CME activities of Ethereum and Bitcoin.
Analysis by Velo Data indicates that the Ethereum futures basis on CME is presently trading at a 5% premium over Bitcoin, surpassing a 20% premium.
Moreover, open interest in ETH on the CME has begun to increase, although it lags behind the initial surge of Bitcoin. In spite of the fact that confirmation may be premature, there are signs that “tradfi” may begin to transfer its focus to the ETH ETF market two months from now.
In a similar fashion, the Grayscale discount is diminishing, for the first time since July 2021, falling below 10%. The decline in value can be attributed to increasing interest in Bitcoin exposure and conjecture surrounding the possible authorization of a Bitcoin ETF, as well as the conversion of GBTC’s trust structure to an ETF.
According to the report, a similar pattern was observed in Grayscale’s ETHE product, whose discount to NAV is currently below 15%. In contrast, the options market has witnessed a consistent decline in implied volatility amidst Bitcoin’s and Ethereum’s incremental ascent.
Nevertheless, volatility has increased marginally over the past week and month as a result of the recent precipitous price surge.
Given the current volatility level of below 60%, an asset that ordinarily experiences up to 80% volatility and appears to be emerging from a dormant phase could be deemed attractive.
Today, ETH is valued at $2,351.81, and its 24-hour trading volume amounts to $11,381,095,211.35. This corresponds to a price increase of 8.56% over the past week and 0.38% over the last twenty-four hours.
The current value of the global crypto market capitalization is $1.71 trillion, representing a change of -0.86% over the past twenty-four hours and 92.02% over the past year. At present, Bitcoin (BTC) holds a market capitalization of $857 billion, signifying a dominance of 50.09%.
Stablecoins, meanwhile, have a market capitalization of $131 billion, or 7.65% of the total crypto market capitalization.
ETH usher 2024 at a bullish state
Ethereum is on track to reach its $2,500 target in the current cycle. Analyzing derivatives data suggests that market participants are bullish in January 2024.
Deribit data suggests an underlying positive bias among Ethereum derivatives traders. The put/call ratio is thought to be a measure of market sentiment. It is a contrarian indicator that examines option buildup. The put/call ratio informs traders when it is appropriate to make a contrarian call on an asset.
As of today, Ether’s put/call ratio is 0.38, according to Deribit. The put/call ratio for options contracts expiring on January 26, 2024, is 0.19. This equates to nearly two puts for every ten calls, indicating a bullish tilt among derivatives traders.
There are twice as many calls as puts for the December 29 expiry, implying that Ethereum derivatives traders are positive about the ETH price increase by the end of December.
The altcoin has remained above the $2,300 mark, while Ethereum is on the rise. In the last month, the altcoin has produced around 13% weekly gains and up to 25% monthly gains for traders. In the last 24 hours, the altcoin’s trade volume has risen to $12.36 billion.
