Without a doubt, Ethereum stands as the second cryptocurrency to have spot ETFs, is the preferred blockchain for many institutional tokenization initiatives, and hosts the leading stablecoins. With the largest ecosystem of applications and blockchain developers, ETH continues to set the standard for its competitors. While short-term price movements are volatile, the long-term outlook for ETH is decidedly optimistic,” he stated.
In a research note released on Tuesday, K33 Research attributed Ethereum’s underperformance to “lackluster” ETF inflows. However, if ETH ETFs follow a similar trajectory to bitcoin ETFs, analysts anticipate that inflows could eventually increase.
Another point of interest is that CME futures premiums for ETH are currently trading at a “rare premium” over BTC.
Volatility Effect on Ethereum
The majority of the recent uptick in exposure comes from the September contract, suggesting that long-biased traders are anticipating a sustained upward trend in the coming weeks, they observed.
Volmex’s volatility indices, which track the expected 30-day volatility for both BTC and ETH, show ETH at 67 and BTC at 57. For context, the Ethereum Volmex Implied Volatility (EVIV) hit 88 on August 5 (during the brief price crash), which was a peak for the index. ETH dropped to a low of $2,100 that weekend, having started the month at $3,200, before bouncing back to over $2,500.
“Future volatility levels will largely depend on upcoming market developments. Bullish price movements could create a positive correlation between spot prices and implied volatility, meaning implied volatility would rise alongside the spot price. However, until some market uncertainties are resolved, implied volatility may remain high,” Kennelly stated.
For most of 2023 and 2024, the EVIV-BVIV Index spread has been significantly lower, and at times, even negative. Volmex’s BVRP and EVRP Indices, which measure the volatility risk premium for BTC and ETH by comparing 30-day implied and realized volatility, are also at their lowest levels since early 2024.
ETH is currently hovering just below $2,600, about 47% off from its peak in November 2021.
What May Be Seen Shortly
However, Ethereum’s trading volume might soon see a boost as summer ends. Additionally, as some analysts have pointed out, the upcoming election and potential interest rate cuts, which could begin as early as September, could influence Ethereum’s price movement.
At the same time, CME traders are entering the September contract, with rising premiums suggesting that long-biased traders are focusing on medium-term strategies rather than short-term ones. K33 has noted that CME’s historical tendency to lead market momentum is something to closely monitor in the coming weeks.
Get free access to our lifetime VIP membership. Join us here.
Leave a Reply