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16/07/24
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Kaiko Believes ETH May Perform Better Than BTC Following the Launch of Spot ETH ETFs
On July 15, Kaiko published a report noting that the ETH to BTC which is used to measure their relative performance is still on the high side around 0.05. It was close to 0.045 when the United States Securities and Exchange Commission (SEC) approved spot ETH exchange-traded funds (ETFs) two months ago.
Kaiko noted that a stronger ratio points to the possibility of ETH maintaining a better performance relative to BTC to when the ETH ETFs are launched. Trading volumes were unimpressive over the summer months but liquidity conditions remained unmoved.
“ETH’s 1% market depth has remained consistent around $230mn since approval. It had dipped below $200mn at the beginning of May, but reverse this downtrend after the SEC green lit spot ETFs,” reads the report.
The platform believes that ETH’s liquidity conditions may be further enhanced when the spot ETFs are approved for listing and trading, just as BTC saw an improvement in liquidity after spot BTC ETFs were launched in the United States in January.
The 20 percent decline in prices did not hinder the resiliency of spot markets, while perpetual futures experienced rapid cooling. It seems traders were less convinced based on their insignificant willingness to pay high rates towards maintaining long positions, as suggested by funding rates reducing by 50 percent.
“Open interest has also come down from highs of around $11bn following approval. The drop in funding rates and open interest may be linked to uncertainty over when these ETFs will launch,” reads the report.
Crypto market participants are focused on the launch of spot ETH ETFs, with analysts suggesting that their final approval could happen in the near term. Recently, Bloomberg ETF analyst Eric Balchunas said the SEC asked applicants to submit amended S-1 registration forms by July 16.
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