The underwhelming performance of the nine newly launched Ethereum (ETH) futures exchange-traded funds (ETFs) in the US, which were opened for trading for the first time, has prompted analysts at Norway-based digital asset research and investment firm K33 Research to call for a return to Bitcoin (BTC).
Time to Hit the Brakes on Ethereum, the Altcoin King
In a market report published on October 3rd by K33 Research analysts Anders Helseth and Vetle Lunde, they pointed out that the initial trading volume of Ethereum futures ETFs could only reach 0.2% of the trading volume achieved on the first trading day of the ProShares Bitcoin Strategy ETF (BITO) in October 2021, indicating that it is time to hit the brakes on ETH and return to BTC.
The analysts noted that no one expected the initial trading volume of Ethereum futures ETFs to come close to the performance of Bitcoin futures ETFs, which were launched in the midst of a strong bull market. The first-day figures fell significantly below expectations, with the initial trading volume of Ethereum futures ETFs representing only 0.2% of the trading volume reached by Bitcoin futures ETFs in 2021.
The lack of institutional appetite for Ethereum futures ETFs led to a backtrack on Lunde’s previous recommendation to increase ETH allocation to take full advantage of the ETF hype. In his analysis, Lunde stated, “The launch of Ethereum futures ETF provides an important lesson in assessing the impact of increased institutional access to cryptocurrency investments; increased institutional access will create buying pressure only if there is significant unsatisfied demand,” while adding the note, “This is not the case for ETH at the moment.”
In the section titled “More chop ahead” of the report, Lunde highlighted that the majority of the cryptocurrency market lacks significant short-term price catalysts and is likely to continue its sideways movement in the foreseeable future. According to Lunde, the current outlook could change only with the approval and launch of a spot Bitcoin ETF in early next year and Bitcoin’s block reward halving expected to take place in April 2024. Lunde said, “Currently, the attraction in the cryptocurrency market is focused on BTC, and promising developments in the future support aggressive accumulation.”
The Biggest Hurdle for the Cryptocurrency Market: Macro Trends
Ben Laidler, the global market strategist at trading platform eToro, is charting a similar path to Lunde’s for the cryptocurrency market, albeit in a slightly more bearish trend. Laidler stated that the possible downward trigger for the prices of fundamental cryptocurrencies like BTC could be the current macro trends, saying:
The Fed and oil prices have consistently been strong macro influencers on the cryptocurrency market for the past few years. In the late stages of the current interest rate hike cycle, the market is looking for more good news to continue, but a rise in oil prices could have a cooling effect on sentiment.
