Will Ethereum rise with Spot ETFs? An In-Depth Analysis of Kaiko

A recent report from Kaiko captures the market’s attention, analyzing the potential impact of Ethereum (ETH) spot ETFs. This study comes at a crucial time considering recent developments in the crypto industry.

Kaiko’s report highlights a significant change in the correlation between Bitcoin (BTC) and Ethereum. Notably, this correlation fell below the historical average of 0.71, a phenomenon that has not been observed since 2021. This deviation occurred simultaneously with the start of trading of Bitcoin spot ETFs. This divergence in price activity between BTC and ETH is intriguing, with BTC benefiting from ETF enthusiasm while ETH experiences a more muted recovery.

Ethereum has faced several trends, from fusion to developments like deflation, ultrasonic money, and Layer 2. Additional challenges include increasing competition from networks like Solana, which with its low transaction fees and airdrops, has been putting pressure on the SOL ratio: ETH to new heights. However, the report suggests that the potential approval of spot ETFs could be the most influential factor at the moment for Ethereum.

Interestingly, the Kaiko report points out that in the last 365 days, BTC has achieved a 100% return, surpassing ETH’s 60% return. This scenario began to change with the approval of the BTC spot ETF, marking an inflection point for ETH. Furthermore, derivatives data indicates that ETH’s recent price movements were primarily driven by spot transactions rather than continuous futures.

Despite the growing excitement around spot ETFs, it’s worth remembering that BTC and ETH futures ETFs have been on the market for years. BITO, the first BTC futures ETF in the US, had an impressive launch in terms of volume. In contrast, trading volumes for ETH futures ETFs have been modest even a year after launch.

While there is cautious optimism regarding ETH ETF applications, data shows that aggressive speculation has not yet begun. ETH trading volume has increased, but derivatives markets do not indicate a clear expectation of an imminent recovery for ETH futures ETFs, which continue to perform sluggishly.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.