Analytics firm Glassnode says signals are suggesting that the initial optimism surrounding digital asset manager Grayscale’s victory over the U.S. Securities and Exchange Commission (SEC) has waned, taming investors’ risk appetite.
Last week, a federal judge ruled that the SEC has to reconsider Grayscale’s application to launch exchange-traded fund based on Bitcoin Trust.
While crypto markets jumped on the news, they quickly retraced their gains.
In a new report, Glassnode says that the way derivatives markets are pricing Ethereum (ETH) is providing hints about market sentiment, and that the hype surrounding Grayscale’s victory isn’t enough to support prices.
The analytics firm says that the modest amount of volume on Ethereum’s derivative markets suggests that investors are looking to place capital higher up the risk curve.
“Since the beginning of the year, there has been a notable uptick in Ethereum options markets, with volume rising by +256% to a daily trade of $326M/day. Meanwhile, futures volumes have experienced a steady decline this year, falling from $20B/day in early January, to just $8B.day today. The only notable exception was a brief uptick to around $30B/day around the Shanghai upgrade.
Given there has been no significant shift in trade volumes for either market in August, it suggests that traders are continuing to move liquidity higher up the risk curve.”
All in all, Glassnode says investors are currently hesitant to make higher risk plays on the crypto space, despite all the optimism in recent weeks.
“The initial optimism surrounding Grayscale’s victory over the SEC was short-lived, with Ethereum’s value dipping back to the August lows within a matter of days. Spot markets continue seeing capital outflows, and derivative markets are also witnessing a persistent decline in liquidity. Overall, investors appear hesitant to return to the markets, preferring to move capital higher up the risk curve.”
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