Over the past 30 days, ethereum (eth), the second-largest cryptocurrency, has seen a notable 17% rise, outperforming bitcoin (btc), which posted a 2.5% rise over the same period.
This arises as the initial enthusiasm around the approval of the exchange traded funds (ETF) from the US Securities and Exchange Commission (SEC) appears to have declined, with btc seeing a 5% drop over the past seven days.
Interestingly, according to cryptocurrency trading firm QCP Capital, following the approval of bitcoin ETFs, attention has shifted to the possible launch of a eth Spot ETFwhich could be one of the factors for ethereum to outperform btc.
ethereum gains ground against btc
According According to QCP Capital, total trading volumes in the 11 ETFs in the last week reached $9.8 billion. He bitcoin Trust in Grayscale (GBTC) alone accounted for $4.6 billion.
Since converting from a trust to an ETF, GBTC has seen outflows of $1.17 billion. This is not “surprising” for the company, considering GBTC has been trading at a discount since 2020, offering investors the opportunity to get out at par.
btc initially rose to a high of $49,100 following the ETF's approval, but has since seen a decline, consolidating above the $40,000 support level. Volumes have slowed since the initial launch and market attention is focused on GBTC Outflows.
Meanwhile, ETHBTC, which was trading below 0.05, has seen an uptrend to 0.06. According to QCP Capital, ethereum is expected to continue outperforming bitcoin in the medium term as the narrative shifts towards potential eth Spot ETF approvals.
Declining bitcoin Forward Contract Yields
Following the launch of the btc spot ETF, btc forward contracts have seen a larger decline compared to eth forward contracts. btc 1-month forward fell from 32% annualized to 9% (-23%), while eth 1-month forward fell from 28% to 12% (-16%).
According to QCP Capital, despite falling yields, eth forwards still look attractive and offer 11-13% annualized return. Furthermore, selling eth at 1 month of 2200 Puts presents a viable option with returns of over 21% annually, and could be a suitable level to buy in the event of a drop in potential eth spot ETF approvals.
Ultimately, the crypto firm suggests that the upcoming btc halving in mid-April and the possible approval of eth spot ETFs starting in May are anticipated to be major events for the crypto market.
Meanwhile, market movements can also be influenced by macroeconomic developments. The January Federal Open Market Committee (FOMC), as well as the February Nonfarm Payrolls (NFP) and Consumer Price Index (CPI) reports, are being closely monitored for information.
The pace of balance sheet liquidation, discussed briefly in December 2023, is expected to provide further clarity during the January FOMC meeting. Market consensus suggests a slowdown in quantitative tightening (QT), but the timing and extent of these changes remain uncertain.
Overall, the possible launch of an ethereum spot ETF has sparked speculation and could have a transformative impact on the ethereum ecosystem. As the market faces changing dynamics, the focus remains on key events such as the btc halving and potential eth spot ETF approvals.
Featured image from Shutterstock, chart from TradingView.com
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