The crypto world was buzzing with anticipation for the new Ethereum futures exchange-traded funds (ETFs). But the initial reception? Let’s just say it wasn’t the roaring applause many expected. In fact, the performance of these nine new ETH ETFs has been, well, a bit of a letdown. This lukewarm debut has leading analysts at K33 Research suggesting it might be time to pump the brakes on Ethereum and shift gears back to Bitcoin (BTC). Let’s dive into why experts are saying “rotate back” to Bitcoin, and what this could mean for your crypto portfolio.
Ethereum ETF Launch: A Damp Squib?
According to a recent market report by K33 Research, analysts Anders Helseth and Vetle Lunde are pretty clear: it’s time to reconsider your Ethereum enthusiasm, at least for now. Their report, published on October 3rd, points to the underwhelming trading volume of the newly launched Ether futures ETFs. How underwhelming? Hold onto your hats – it was a mere 0.2% of the trading frenzy seen when the ProShares Bitcoin Strategy ETF (BITO) first launched back in October 2021. That’s a significant difference.
To put this into perspective:
- Bitcoin ETF Launch (October 2021): Massive hype and trading volume, reflecting a bull market frenzy.
- Ethereum ETF Launch (October 2023): Significantly lower volume, only 0.2% of Bitcoin’s initial ETF volume.
While no one expected Ethereum ETFs to replicate Bitcoin’s explosive launch numbers – especially considering the different market conditions – the reality has been “strongly” below expectations, as reported by Cointelegraph.
Why the Lackluster Ethereum ETF Debut?
This tepid response from institutional investors has even led Vetle Lunde to reconsider his previous stance. He’s now walking back his earlier advice to increase Ethereum allocation, which was based on capitalizing on anticipated ETF hype. Lunde emphasizes a crucial lesson from this launch:
“The ETH futures ETF launch provides an important lesson for evaluating the impact of easier access to crypto investments for traditional investors: increased institutional access will only create buying pressure if significant unsatiated demand exists. This is not the case for ETH at the moment.”
In simpler terms, just because you build it (an ETF), doesn’t mean they will come (with massive buying pressure). Institutional investors, it seems, aren’t exactly clamoring for Ethereum exposure right now.
“More Chop Ahead” for the Crypto Market?
Looking beyond just Ethereum ETFs, Lunde paints a broader picture of the crypto market in a section of the report titled “More chop ahead.” He suggests that most of the crypto market is currently lacking significant short-term catalysts to drive prices upwards. This points towards a continuation of the sideways trading we’ve been seeing for the foreseeable future.
So, what does this mean for your crypto strategy?
- Sideways Trading: Expect continued price consolidation across much of the crypto market.
- Lack of Catalysts: Few immediate triggers are on the horizon to spark a major bull run (outside of Bitcoin).
Related: Bitcoin bull market awaits as US faces ‘bear steepener’ — Arthur Hayes
Bitcoin: The Crypto King Reclaiming Its Throne?
In this somewhat uncertain crypto landscape, Bitcoin appears to be standing out. Lunde believes the current environment is primarily favorable for BTC. Why? Because Bitcoin has two potential aces up its sleeve:
- Spot ETF Approval: The anticipation of a potential spot Bitcoin ETF approval early next year is building. This could open the floodgates for even more institutional investment into Bitcoin.
- Bitcoin Halving: The next Bitcoin halving event, estimated for mid-April, is on track. Historically, halvings have been bullish catalysts for Bitcoin as they reduce the supply of new BTC entering the market.
“The gravitational pull in crypto for the time being stays in BTC, with a promising event horizon down the line, still favoring aggressive accumulation.”
Essentially, Bitcoin has some clear positive events on the horizon that could act as significant price drivers, while Ethereum currently lacks such immediate catalysts.
Macro Winds: Could They Still Blow Crypto Off Course?
While Bitcoin looks promising, it’s crucial to remember the broader macroeconomic picture. Ben Laidler, global markets strategist at eToro, echoes a similar sentiment regarding crypto assets, but with a slightly more cautious tone. He highlights the influence of macro factors on crypto prices.
Laidler points to two key macro influencers:
- The Federal Reserve (The Fed): The Fed’s monetary policy and interest rate decisions have a significant impact on crypto markets.
- Oil Prices: Rising oil prices can impact inflation and overall market sentiment, indirectly affecting crypto.
According to Laidler, “At the late stage of the rate hike cycle we’re in, the market is looking for further good news to push on, but with oil prices rising again, this could have a cooling effect on sentiment.”
Final Thoughts: Bitcoin or Ethereum? The Scale Tips…
The initial Ethereum ETF launch hasn’t ignited the market in the way many hoped. Analysts at K33 Research are suggesting a strategic shift back to Bitcoin, citing its stronger near-term catalysts like the potential spot ETF approval and the upcoming halving. While macro factors always play a role and caution is warranted, Bitcoin seems to be regaining its position as the more compelling crypto investment in the current climate. For investors looking for potential growth in the crypto space, it might be wise to heed the advice and consider giving Bitcoin a closer look as we head into the coming months. It appears, for now, the crypto gravitational pull is firmly back with BTC.
Disclaimer: The information provided is not trading advice, Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.
