Ethereum (ETH) suffered a major blow, dropping to $1,570, marking its lowest fee level in 2023. The drop has sparked growing concerns among traders as Ethereum’s status as the second largest cryptocurrency in terms of market capitalization is becoming an increasingly polarizing topic.
Santiment, a well-known cryptocurrency data analysis company, has reported on the growing bearish sentiment around Ethereum. Although such pessimism can be unsettling for some investors, it is often a reliable indicator of a possible market turnaround.
Kaiko Research Report on Ethereum Underperformance
Meanwhile, Kaiko Research has released a suit report answering the pressing question: “Why is ETH underperforming BTC?” The report examines the state of Ethereum markets following the recent launch of several future ETH exchange-traded funds (ETFs).
Last week, the United States Securities and Exchange Commission (SEC) approved the start of trading of six futures-based ETH ETFs. However, these ETFs have failed to attract significant trading volume or provide a substantial boost to the crypto markets.
The two largest ETFs by trading volume, VanEck’s EFUT and ProShares EETH, saw an average daily trading volume of just $0.5 million in their first week, significantly lower than previous ETFs. impressive debut of the first BTC futures ETF, ProShares Bitcoin Strategy (BITO), which surpassed $1 billion in trading volume on its first trading day.
The report attributes Ethereum’s underperformance to a combination of factors, including the current market environment characterized by rising risk-free rates, strong U.S. economic data, and increasing macroeconomic uncertainty. Additionally, none of the ETH ETFs had the early mover advantage like BITO.
Despite some initial price increases, Ethereum closed the week in the red. Its underperformance relative to the broader market has been evident since the merger, with the ETH/BTC price ratio and trading volume trending downward over the past year. ETH spot trading volume has remained relatively stagnant over the past two months, rarely exceeding $2 billion.
While open interest in ETH perpetual futures has increased since early September, funding rates have remained neutral to negative, suggesting a lack of clear market direction.
Still, the launch of ETH futures ETFs may not have generated substantial trading volume. However, it still offers investors a liquid, profitable and transparent way to gain exposure to Ethereum.
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