Markets
ETH set to eclipse BTC after ETF launch in sight
- Market trends favor Ethereum as ETF launch approaches.
- The report showed a scenario of changes in trading volume in spot, options, futures and perpetual contracts.
Cryptocurrency markets have been experiencing high volatility over the past couple of months. Market preferences are changing, especially since the SEC approved Ethereum [ETH] ETFs in sight in May.
With the anticipated launch of ETH spot ETFs, investors are increasingly optimistic.
While ETH ETFs have yet to start trading, a report from Kaiko and a joint report from Block Scholes and Bybit have shown shifts in market preferences.
A change in trends
According to a recently released report by Block Scholes and Bybit, there has been a major shift in the trading volumes landscape across spot, futures, options, and perpetual contracts.
The report posited that Ethereum had a better volatility premium compared to Bitcoin [BTC]. This primarily arose from increased address activity and a positive shift in market sentiment towards ETH.
Source: Blockscholes and Bybit
Ethereum gains ground over Bitcoin
The ETH to BTC ratio has sustained a positive value of 0.05 since the approval of spot ETFs. This ratio is considerably higher than pre-approval levels of around 0.045.
The higher ratio suggests that ETH spot ETFs will continue to outperform BTC once they start trading.
Source: Kaiko
General market sentiment
ETH has outperformed BTC in several areas since the approval of ETH spot ETFs in May.
Despite the high volatility in the cryptocurrency market over the past two months, ETH futures have shown more resilience and faster recovery than Bitcoin Open Interest.
ETH’s faster recovery suggests growing positive sentiment, with many investors confident in its future.
Source: Blockscholes and Bybit
ETH trading volume has been sustained within the same range since May. According to Kaiko, ETH liquidity has been sustained at 1% depth and a consistent range of $250M.
The ETF approval appears to have changed the trend after falling below $200 million and reversing the trend after the SEC approval. Therefore, the anticipation of the ETF played a critical role in improving liquidity.
Source: Kaiko
Additionally, ETH perpetual contracts experienced an increase in trading volume. The increase showed that investors were willing to pay a premium to hold long positions, which showed confidence in the future potential of the crypto.
As reported by Kaiko, Implied Volatility has been increasing over the past seven days. For example, ETH options set to expire this Friday have increased from 53% on July 13 to 62% at the time of publication.
To read Ethereum’s [ETH] Price forecast 2024-25
The rise in these contracts implied that investors were paying short positions to protect themselves against short-term price increases.
This market sentiment shows considerable optimism about the future of ETH, especially with this week’s upcoming ETFs.
Source: Kaiko