Crypto Analytics Firm Kaiko: Ethereum ETF Speculation Hasn’t Begun Despite Market Recovery
Crypto analytics firm Kaiko reports that the speculative frenzy surrounding Ethereum (ETH) has yet to pick up, even though the cryptocurrency has rebounded from its 2022 lows. While Bitcoin (BTC) has benefited from the excitement surrounding the approval of BTC exchange-traded funds (ETFs) in the US, speculation on an Ethereum ETF has yet to spark. The US Securities and Exchange Commission (SEC) recently announced a delay in its decision on Fidelity’s spot market Ethereum ETF application until March.
Lack of Speculation on ETH ETF
According to Kaiko, although there is some hype surrounding ETH ETF applications, the data suggests that aggressive speculation has not yet begun. While ETH trade volume has seen a spike, derivatives markets have not exhibited the usual signs of traders positioning for a rally. ETH futures ETFs have also experienced slow trading in recent months.
ETH Establishing Its Own Narrative
As each asset matures and develops its own narratives, the correlation between ETH and BTC has declined to multi-year lows. While ETFs were a significant catalyst in BTC’s history, it remains to be seen if ETH can replicate the same impact. However, ETH has various narratives it can rely on, such as the introduction of new Layer-2 scaling solutions and the success of projects like EigenLayer and restaking.
Derivatives Data Analysis
Kaiko’s analysis of derivatives data reveals that recent Ethereum price movements have mainly been driven by spot markets rather than perpetual futures, indicating that traders are not using leverage in anticipation of an ETH ETF. In September and October, aggregated open interest in futures markets fell by over 20% from summer levels, with little price movement and neutral funding rates. Following BTC approval, funding rates have reset to neutral, but open interest has surged ahead of price, suggesting increased shorting. Nevertheless, a significant build-up in open interest, which is characteristic of a bull market, has not yet occurred.
Current ETH Price
At the time of writing, Ethereum is trading at $2,473.
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Analyst comment
Neutral news
As an analyst, the lack of speculation on an Ethereum ETF suggests that the market is not currently anticipating a major rally for Ethereum. However, Ethereum has its own narratives to rely on, such as scaling solutions and project success. The analysis of derivatives data indicates that recent price movements have been driven by spot markets, rather than leverage from futures markets. The current price of Ethereum is $2,473.
