Limited institutional interest in Ethereum in the context of a bear marketIn the context of the crypto bear market, starting from October 2nd, six different Ethereum futures financial instruments officially began trading, but have not yet reignited institutional investors' enthusiasm for ETH. The total trading volume of ETH futures ETFs on their first day was less than $1
Limited institutional interest in Ethereum in the context of a bear market
In the context of the crypto bear market, starting from October 2nd, six different Ethereum futures financial instruments officially began trading, but have not yet reignited institutional investors' enthusiasm for ETH. The total trading volume of ETH futures ETFs on their first day was less than $1.5 million, compared to Bloomberg data, the first BTC futures ETF (BITO) in 2021 had a trading volume of over $1 billion on its first day. That is to say, the net inflow of funds on the first day of ETH futures ETFs is less than 2% of BITO.
CoinbaseResearch leader Duong believes that there are several main reasons for the above differences:
Firstly, the market timing for the launch of ETFs varies. Proshares' BTC futures ETF was launched during the 2021 crypto bull market cycle, with ample market liquidity funds, while ETH futures ETF was launched during the current bear market cycle, with severe funding shortages.
Secondly, the familiarity level of investment advisors varies. Investment advisors are usually more familiar with BTC, which makes it easier for BTC to integrate into their clients' investment portfolios. ETH is often considered a more complex investment product and has not yet been well understood and accepted in the traditional investment community.
Thirdly, changes in expectations at the legal level. Judge Katherine PolkFaila recently reportedUniswapIn the court ruling, ETH was marked as an encrypted product. This may have raised market expectations for ETH spot ETFs, while there has been a lack of enthusiastic market reaction towards ETH futures ETFs.
From the perspective of capital flow, the cryptobear market is still having a huge impact on institutional capital. According to Coinshares' statistics, there have been 24 net outflows of funds in the 39 weeks since 2022, accounting for 61.5% of the entire period. From the capital flow data, it can also be seen that the interest of institutions in encrypted assets has changed: as of October 4th, ETH's capital outflow this year reached $101 million, while BTC had $219 million in capital inflows during the same time frame. However, the weekly net inflows of BTC and ETH have been relatively similar recently, at $16.4 million and $12.9 million, respectively.
Overall, despite the cooling of ETH futures ETFs, their trading volume is still at a normal level for new ETFs and has played a positive role in institutional investment interest. However, due to the bearish market background and other factors, it is necessary for the cryptocurrency market to warm up as a whole in order to attract more institutional capital inflows.
Potential Risks of Ethereum Pledge
On October 5th, JPMorgan released a research report pointing out the centralization issue of Ethereum's network and pointing out that the ETH pledge yield has decreased from 7.3% before the upgrade in Shanghai to 5.5%. Compared with the still rising traditional financial market yield, the attractiveness of ETH as an investment target has decreased.
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Ebunker official website: https://www.ebunker.io
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