ETH's Prospects After BTC ETF Launch
Date: 2024-01-20 Author: Dima Zakharov Categories: BLOCKCHAIN
ETH Trading Surges After BTC ETF Launch
In a recent development in the cryptocurrency market, Colin Wu, a renowned expert in the field, has conducted a detailed examination of the current landscape. He has drawn attention to a noteworthy report published by Kaiko researchers, shedding light on the state of affairs in the cryptocurrency industry following the launch of spot Bitcoin ETFs (BTC ETFs).
Impacts on BTC:ETH Correlation
One of the significant findings in the report is the decline in the correlation between Bitcoin (BTC) and Ethereum (ETH) to 0.71, a level not seen since 2021. This correlation drop suggests a changing dynamic in the cryptocurrency market.
ETH Trading Volume Soars
According to the specialists at Kaiko, the trading volume of Ethereum (ETH) has surged significantly following the introduction of spot BTC ETFs. However, Colin Wu cautioned that there are no clear signs in the derivatives markets indicating that traders are gearing up for a price rally. He stated, "Although ETFs were one of the most stimulating events in BTC's history, it remains uncertain whether Ethereum can replicate the success of its older sibling."
Recent Performance Highlights
As of January 19, 2024, spot trading volumes for ETH on CEX platforms reached their highest levels since the FTX crash in November 2022. Furthermore, there were three days with record-breaking 24-hour trade volume since the beginning of 2023, with January 10, 11, and 12 seeing significantly higher trading volumes compared to any other day in the previous year.
Spot Funds vs. Futures
The data on derivatives also indicates that recent price movements in ETH are primarily driven by excitement surrounding spot funds rather than futures.
Speculative Trading Yet to Begin
In conclusion, Kaiko researchers pointed out, "Despite some buzz surrounding ETH ETFs, the data shows that aggressive speculation has not yet begun. While spot trading volume for Ethereum has sharply increased, there are no clear signs in the derivatives markets that traders are preparing for a price rally. Futures funds have been trading slowly for several months."
ETH and BTC Correlation Drops
Analysts also noted that the correlation between ETH and BTC has dropped to multi-year lows, signaling a divergence in their respective trajectories. They also mentioned the uncertain prospects of Layer 2 scaling projects and staking protocols in the cryptocurrency ecosystem.
