A new report by K33 Research, a leading crypto market analysis firm, suggests that Ethereum futures exchange traded funds (ETFs) have failed to attract significant institutional demand, and that investors should switch back to Bitcoin as the main crypto asset.
Ethereum futures ETFs see low trading volume
On Oct. 3, nine new Ethereum futures ETFs were launched on the New York Stock Exchange (NYSE) and the Nasdaq, following the approval by the U.S. Securities and Exchange Commission (SEC) in September. These ETFs allow investors to gain exposure to the price movements of Ether (ETH), the native cryptocurrency of the Ethereum blockchain, without having to buy or hold the actual tokens.
However, according to the K33 report, the initial trading volume of these ETFs was very disappointing, accounting for only 0.2% of what the ProShares Bitcoin Strategy ETF (BITO) amassed on its first day of trading in Oct. 2021. BITO was the first Bitcoin futures ETF approved by the SEC, and it sparked a huge rally in the crypto market, pushing Bitcoin to new all-time highs.
The K33 analysts, Anders Helseth and Vetle Lunde, said that they expected some difference in the trading volume between the Bitcoin and Ethereum futures ETFs, but not such a huge gap. They attributed this to the lack of institutional appetite for Ether ETFs, and advised investors to “pull the brakes on ETH and rotate back into BTC”.
Ethereum lacks short-term catalysts, Bitcoin has more upside potential
The K33 report also argued that Ethereum lacks any meaningful short-term price catalysts, and that it will most likely continue to trade sideways for the foreseeable future. The analysts pointed out that Ethereum is facing several challenges, such as high gas fees, scalability issues, regulatory uncertainty, and competition from other smart contract platforms.
On the other hand, Bitcoin has more favorable factors that could boost its price in the coming months. The K33 analysts mentioned two main events that could create more buying pressure for Bitcoin: the potential approval of a spot Bitcoin ETF by the SEC early next year, and the halving event that is expected to occur in mid-April 2023.
A spot Bitcoin ETF would allow investors to buy and sell shares that represent actual Bitcoins, rather than futures contracts that track their price. This would reduce the risks and costs associated with futures trading, and increase the liquidity and accessibility of Bitcoin for retail and institutional investors.
The halving event is a process that occurs every four years, in which the reward for mining new Bitcoins is cut in half. This reduces the supply of new Bitcoins entering the market, and creates a scarcity effect that increases its value. The previous halving events have been followed by significant bull runs in the crypto market.
Bitcoin remains the king of crypto, Ethereum needs more time
The K33 report concluded that Bitcoin remains the king of crypto, and that it has a promising event horizon down the line. The analysts recommended aggressive accumulation of Bitcoin at current levels, and said that they expect it to outperform Ethereum in the near future.
Ethereum, on the other hand, needs more time to mature and prove its value proposition as a decentralized platform for smart contracts and decentralized applications (DApps). The analysts said that they are still bullish on Ethereum in the long term, but that it is not ready to challenge Bitcoin’s dominance yet.