The debut of nine new Ethereum futures exchange-traded funds (ETFs) on October 2 has fallen short of expectations, prompting market analysts at K33 Research to advocate a return to Bitcoin. In their market report released on October 3, analysts Anders Helseth and Vetle Lunde expressed disappointment in the initial performance of these Ethereum futures ETFs.
The trading volume for Ether futures ETFs on their first day of trading amounted to a mere 0.2% of the colossal volume achieved by the ProShares Bitcoin Strategy ETF (BITO) during its October 2021 launch. While it was anticipated that Ether ETFs wouldn’t match the Bitcoin ETF’s initial success, the figures were far from encouraging.
This lack of enthusiasm from institutional investors led Vetle Lunde to backtrack on his prior advice to increase Ethereum allocations, cautioning that there was no substantial unsatiated demand for Ether at the moment.
Lunde’s report also highlighted the current absence of significant short-term price catalysts in the broader cryptocurrency market, indicating a potential continuation of sideways movement. According to Lunde, the most promising prospects lie with Bitcoin, which awaits a potential ETF approval in early 2024 and an upcoming halving event in mid-April.
This view aligns with Ben Laidler, global markets strategist at eToro, who suggested that macroeconomic factors such as the Federal Reserve’s decisions and rising oil prices could influence the crypto market’s direction.
Limited Investment Inflows for Ethereum ETFs
Despite the excitement surrounding the Ether futures ETFs’ launch, these products saw limited investment inflows. On the first day of trading, all nine ETFs collectively generated less than $2 million in trading volume.
Valkyrie’s Bitcoin Strategy ETF, the most popular among them, accumulated $882,000 in trading volume, even though it had initially focused solely on Bitcoin futures before adjusting its strategy to include Ethereum.
Comparatively, the ProShares Bitcoin Strategy ETF, introduced during a bullish crypto market in October 2021, recorded over $1 billion in trading volume on its first day. Eric Balchunas, senior Bloomberg ETF analyst, noted that, while the volume wasn’t insignificant, investors generally favored spot ETF products over futures.
However, the SEC’s simultaneous launch of these products was a strategic move to prevent any single fund from dominating the market. Amid this competition among US firms in the emerging Ether futures market, ETF firm Volatility Shares opted to cancel its plans, citing a lack of opportunity at the current juncture.
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