Investor Disappointment: Ethereum Futures ETFs Falter, Bitcoin Gains Favor

According to market analysts at K33 Research, the recent introduction of nine Ethereum futures exchange-traded funds (ETFs) on Ocr 2 has been disappointing. As a result, they have recommended shifting focus back to Bitcoin. In their market report released on Oct 3, analysts Anders Helseth and Vetle Lunde expressed their dissatisfaction with the initial performance of these Ethereum futures ETFs.

On its first day of trading, the Ether futures ETFs witnessed a meager 0.2% trading volume compared to the remarkable achievement of the ProShares Bitcoin Strategy ETF (BITO) during its Oct 2021 launch. Although it wasn’t anticipated that Ether ETFs would replicate the initial success of Bitcoin ETFs, there was potential for higher numbers.

Vetle Lunde reconsidered his earlier recommendation to increase Ethereum allocations due to the lukewarm response from institutional investors. He cautioned that there is presently a lack of significant unmet demand for Ether.

Lunde’s analysis further highlighted the absence of significant short-term price catalysts in the overall cryptocurrency market. This suggests a potential continuation of a sideways trend. Lunde specifically mentioned that Bitcoin exhibits the most promising prospects, considering a likely approval for an ETF in early 2024 and an upcoming halving event slated for mid-April.

This viewpoint aligns with the stance of Ben Laidler, eToro’s global markets strategist. According to him, factors such as decisions made by the Federal Reserve and the rising oil prices could impact the trajectory of the cryptocurrency market.

Limited Hype: Ether Futures ETFs Fail To Attract Significant Investment

Ether futures ETFs, despite the hype surrounding their introduction, saw limited investment inflow. On their first trading day, these nine ETFs collectively generated less than $2 million in trading volume.

Valkyrie’s Bitcoin Strategy ETF, the most preferred option among these choices, successfully accumulated a trading volume of $882,000. Significantly, it initially focused on Bitcoin futures but later adjusted its approach to include Ethereum.

In contrast, the ProShares Bitcoin Strategy ETF was launched in Oct 2021 during a bullish cryptocurrency market. Remarkably, it achieved over $1 billion in trading volume on its debut. Eric Balchunas, a senior analyst at Bloomberg who specializes in ETFs, noted that while the trading volume wasn’t insignificant, investors generally preferred spot ETF products rather than futures.

Unprecedented day today with multiple ETFs all launching at same time. No clear winner has emerged, all of them were pretty average, lower than I would have predicted, but its a long run and remember, these hold futures (ETF investors much prefer physical to derivatives) https://t.co/fKGOv8T7pP
— Eric Balchunas (@EricBalchunas) October 2, 2023

The SEC intentionally launched these products together to avoid any single fund monopolizing the market. Amidst the competition among U.S. companies in the emerging Ether futures market, Volatility Shares, an ETF firm, decided to back out due to a perceived lack of opportunity at this time.

“The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.”