Ethereum quiet at $3,800: Calm before the ETF boost?

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    Analyst expects further ETH bullish momentum as options volumes remain high
    However, divergent views on non-staking ETH ETF demand persisted. 

As a researcher with extensive experience in the crypto market, I believe that Ethereum’s [ETH] current quiet phase on the charts may not last long. The bullish sentiment towards ETH is palpable, as evidenced by its higher options market volume compared to Bitcoin [BTC]. This bullishness could be fueled by the anticipation of an Ethereum spot exchange-traded fund (ETF) that is expected to usher in new demand for the altcoin.

Ethereum [ETH], which had previously incurred losses from March through May, has since then remained relatively stable. Its price hovers around $3,800 for approximately two weeks with minimal fluctuations.

Was it the calm before a spot ETH ETF-induced storm on the price charts? Maybe. 

Ethereum’s bullish expectations

Based on data from QCP Capital, a cryptocurrency trading firm situated in Singapore, the trading volume for Ethereum options surpassed that of Bitcoin‘s, implying even greater optimism among investors regarding Ethereum as the leading altcoin.

“The optimistic outlook is expected to persist as investors anticipate the launch of an ETH spot Exchange-Traded Fund (ETF), which could bring about increased demand. This sentiment is reflected in the options market, where Ethereum volatility remains 15% higher than Bitcoin’s.”

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MacroCRG, which is now known as X, or formerly Twitter, discovered that the value of Ethereum (ETH) rose as the US Dollar Index (DXY) weakened. Bitcoin (BTC) also follows this inverse correlation. Therefore, a declining DXY typically triggers a surge for both ETH and BTC.

ETH ETF demand factor

Many market analysts noted a significant appetite for Ethereum from exchange-traded funds (ETFs) focused on spot Ethereum following its launch. Yet, opinions varied among experts, particularly since these Ethereum spot ETFs eliminated the staking feature.

One of the users mentioned that going for a non-staking spot-ETH ETF had ‘an opportunity cost.’

In simpler terms, an Ethereum ETF without staking features has a unique cost in the form of lost potential yield compared to a Bitcoin ETF.

However, on his part, David Hoffman of Bankless rebutted the claim and stated, 

In my opinion, there may be too much emphasis placed on Traditional Finance (TradFi) being concerned about this issue, while Decentralized Finance (DeFi) could not care less and only seeks exposure. My take is that the introduction of staking will merely serve as an extra boost for investments.

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In fact, one of the potential issuers, ARK Invest, dropped from the ETH ETF party, citing that, 

As a crypto investor, I’m constantly on the lookout for effective methods to give my fellow investors access to this groundbreaking technology and maximize its potential benefits for us all. We will persistently assess various strategies and approaches to achieve this goal.

As a crypto investor, I’ve been keeping an eye on the developments in the Ethereum ecosystem. Mike Novogratz from Galaxy Digital recently predicted that staking might be enabled within the next two years following the launch of the ETH exchange-traded fund (ETF). If this timeline holds true, we could witness a significant surge in investments towards Ethereum, often referred to as a “second wind for flows.”

That said, a weakening DXY could boost ETH’s short-term price action before spot ETH ETFs launch. However, how demand plays out post-ETH ETFs remains to be seen. 

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2024-06-05 10:15