The recent surge in Ethereum derivative volume raises questions about the confidence level of Ethereum investors in the upcoming Spot Ethereum ETFs. This surge comes at a time when these funds are set to be launched next week, with high expectations for a price rally for the second-largest cryptocurrency by market cap.
Data from Laevitas indicates that Ethereum’s fixed-month contracts annualized premium currently sits at 11%, reflecting a lack of bullish sentiment among crypto traders towards ETH’s price. Interestingly, this indicator has not surpassed 12% in the past month, suggesting a conservative outlook on Ethereum’s potential price growth amidst the imminent ETF launch.
Despite predictions from analysts like Linda foreseeing ETH reaching $4,000 due to the influx of funds from Spot Ethereum ETFs, traders seem hesitant to believe in such a rapid price appreciation. One possible explanation for this cautious approach is the anticipated sideways trading of Ethereum, fueled by the projected daily outflows of $110 million from Grayscale’s Spot Ethereum ETF.
The final S-1 filings reveal that Grayscale is planning to impose a management fee of 2.50% on its Spot Ethereum ETF, significantly higher than other issuers charging fees as low as 0.25%. This fee structure mirrors the approach taken with its Spot Bitcoin ETF, which experienced notable outflows post-launch due to the higher management fee imposed by Grayscale.
Crypto analyst Leon Waidmann presents a bullish case for Ethereum’s price, highlighting the narrowing discount between Grayscale’s Ethereum Trust (ETHE) and ETH’s market price following ETF approval. Waidmann suggests that ETHE investors have had sufficient time to exit their positions without facing substantial discounts, unlike investors in Grayscale’s Bitcoin Trust (GBTC) who sought to profit from the discount before the ETF launch.
Unlike GBTC and other Spot Bitcoin ETFs that began trading immediately after approval, ETHE and other Spot Ethereum ETFs had a delayed trading start. This delayed launch may have allowed investors looking to capitalize on the discount between ETHE and ETH’s price to do so beforehand, as noted by Waidmann.
The discrepancy between Ethereum derivative volume and the optimism surrounding the Spot Ethereum ETFs suggests a lack of confidence among investors in Ethereum’s immediate price rally potential. Factors such as anticipated outflows, high management fees, and delayed trading commencement may contribute to the subdued bullish sentiment towards Ethereum in the near term.
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