Asset Management Firm Decides to Return to Bitcoin After Ethereum ETFs’ Failure

• K33 Research Chief Analyst Vetle Lunde and Vice President Anders Helseth stated in their latest report, “We believe it’s time to stop ETH and return to BTC.”
• VanEck launched an Ethereum Strategy ETF, and ProShares, the company that first introduced a Bitcoin futures ETF, introduced the ProShares Ether Strategy ETF and two mixed Bitcoin and Ether funds.
• Bitcoin futures ETFs had the advantage of being launched during the peak of a bull market, but according to analysts, the performance of Ether ETFs was unexpectedly weak.

The launch of Ethereum ETFs did not show as strong a performance as expected: K33 analysts believe it is time to turn to Bitcoin.

Launch of Ethereum ETFs Didn’t Go Well

The highly anticipated launch of Ethereum futures-based ETFs disappointed by capturing only 0.2% of the trading volume seen when Bitcoin futures ETFs were introduced in 2021.

K33 Research Chief Analyst Vetle Lunde and Vice President Anders Helseth said in their latest report, “We believe it’s time to stop ETH and return to BTC,” adding, “We no longer see a strong bull scenario for short-term ETH/BTC.”

Companies like VanEck, ProShares, and Bitwise launched Ethereum futures ETFs nearly two years after the first Bitcoin futures ETF was launched on Monday, giving investors exposure to assets without the need for a crypto wallet, exchange account, or custody.

VanEck launched its Ethereum Strategy ETF, and ProShares, which introduced the first Bitcoin futures ETF, introduced the ProShares Ether Strategy ETF and two mixed Bitcoin and Ether funds. Bitwise also launched two Ether futures ETFs: the Bitwise Ethereum Strategy ETF and the Bitwise Bitcoin and Ether Equal Weight Strategy ETF.

Bitcoin futures ETFs had the advantage of being launched during the peak of a bull market, but according to analysts, the performance of Ether ETFs was unexpectedly weak, and on the day after the launch, they only recorded $8.5 million in assets under management compared to Bitcoin’s $576.5 million.

CME traders were disappointed due to the lack of institutional demand

CME traders were expecting a stronger start for Ether futures ETFs, but as Lunde and Helseth wrote, Ether futures premiums dramatically increased before the launch but quickly receded given the disappointing results, and according to analysts, Ether couldn’t reverse its one-year downtrend against Bitcoin.

Making crypto more accessible to institutional investors doesn’t guarantee immediate interest if demand is lacking. According to Lunde and Helseth, this scenario is reminiscent of the launch of Bitcoin futures on CME in 2017, which took years to gain traction among institutional investors, unlike the rapid success of Bitcoin futures ETFs in 2021.

However, K33 maintains its optimism about the long-term effects of Ether: “The gates are open, and however fast this happens, we believe liquidity is waiting for a broader market sentiment change.”

The crypto market is currently on the rise

Despite the disappointment of Ether futures ETFs, both Bitcoin and Ether saw approximately 5% gains last week, but there was a roughly 10% increase before the ETF launches. BNB, which completes the top three by market capitalization, increased by 2% last week.

According to analysis, the market outlook is still divided, and there is likely to be more volatility in October. Although offshore (sub-zero) funding rates among crypto futures traders indicate a declining trend, option prices are bullish, indicating high demand for call options.