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An analyst noted that Ethereum (ETH) is the second cryptocurrency to have spot ETFs and is the preferred blockchain for institutional tokenization efforts and stablecoin issuance. ETH boasts the largest ecosystem of applications and developers, setting an example for other cryptocurrencies. While short-term price fluctuations are unpredictable, the analyst expressed long-term bullish sentiment for ETH.
K33 Research stated in a report that ETH’s underperformance is due to sluggish ETF inflows. However, they suggested that if ETH ETFs follow the trajectory of bitcoin ETFs, there could be a surge in inflows. Additionally, CME futures premiums for ETH are currently trading at a premium to BTC.
The analysts observed that most of the recent increased exposure to ETH stems from the September contract, indicating that long-biased traders anticipate a sustained upward trend in the coming weeks. Volmex’s volatility indices, which measure the potential future volatility of BTC and ETH over 30 days, show ETH at 67 and BTC at 57.
Historically, the Ethereum Volmex Implied Volatility (EVIV) reached a high of 88 on August 5th, coinciding with a minor price crash. ETH’s price plummeted to $2,100 that weekend from an opening price of $3,200 in August, before recovering to over $2,500.
Kennelly explained that future volatility levels will depend on market developments. Bullish price action could lead to a positive correlation between spot price and implied volatility, where implied volatility increases as the spot price rises. Conversely, unresolved market uncertainties could keep implied volatility levels elevated.
Source: create.vista.com
Throughout much of 2023 and 2024, the spread between the EVIV-BVIV Index has been significantly lower, even negative at times. The Volmex’s BVRP and EVRP Indices, which track the difference between 30-day implied volatility and realized volatility, are also near their lowest levels since the beginning of 2024.
The trading volume for ETH could increase as summer draws to a close. Analysts have suggested that the upcoming election and potential interest rate cuts, possibly beginning in September, could also influence ETH’s price.
CME traders are entering the September contract with growing premiums, indicating that long-biased traders are adopting medium-term strategies rather than short-term ones. Given CME’s historical tendency to lead market momentum, K33 noted that this trend should be closely monitored in the coming weeks.
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