The volume of ETH derivatives suggests that Ethereum investors have little confidence in the Discover Ethereum ETFs, leading to a massive rally for the second-largest crypto token by market cap. This development comes amid the upcoming launch of these funds, which is also expected to take place start trading next week.
Ethereum Futures Premium highlights little confidence in the price of ETH
According to facts from Laevitas, Ethereum’s fixed-month contracts The annualized premium currently stands at 11%, which suggests that crypto traders are not optimistic enough about the price of ETH. Further data from Laevitas shows that this indicator has not yet been able to maintain levels above 12% over the past month.
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This is surprising considering that the Spot Ethereum ETFs, which could launch next week, are expected to cause a price increase for Ethereum. Crypto analysts like Linda have predicted that ETH could rise to $4,000 thanks to these inflows Discover Ethereum ETFs could testify.
However, crypto traders are not convinced that Ethereum is likely to reach such heights, at least not soon enough. A plausible explanation for this lack of excessive bullishness is that Ethereum’s price could continue to trade sideways for a while, thanks to the $110 million daily outflows that research firm Kaiko projected could arise from Grayscale’s Spot Ethereum ETF.
Furthermore, this seems likely after the final S-1 filings by the Spot Ethereum ETF issuers, which showed that Grayscale has the highest fees. The asset manager plans to charge a management fee of 2.50%, while the highest fee among other Spot Ethereum ETF issuers is 0.25%.
Grayscale had done something similar with its Spot Bitcoin ETF, through its management fee at 1.5%, while the other Spot Bitcoin ETF issuers had management fees ranging between 0.19% and 0.39%. This move is believed to have been one of the reasons why Grayscale’s Bitcoin ETF witnessed significant outflows after the launch of the Spot Bitcoin ETFs.
Making a case for Ethereum’s inevitable price rise
Crypto analyst Leon Waidmann has made a bullish argument for the price of ETH and explained why Ethereum investors should be more bullish. He noted that the discount between Grayscale’s Ethereum Trust (ETHE) and the price of ETH has narrowed significantly since the Spot Ethereum ETFs were approved earlier in May.
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Waidmann stated that this has given ETHE investors ample time to exit their positions without significant discounts compared to Grayscale’s Bitcoin Trust (GBTC). Another reason why GBTC is believed to have experienced such outflows was because investors were taking profits from their investments in the trust at a certain price. reduced price compared to the spot price of Bitcoin.
However, unlike GBTC and other Spot Bitcoin ETFs, ETHE and other Spot Ethereum ETFs did not begin trading immediately upon approval. Therefore, Waidmann believes that whoever wanted to take advantage of the discount between ETHE and the price of ETH has already done so before. As such, Grayscale’s ETHE should not witness the same amount of profit-taking as Grayscale’s GBTC after trading commences.
Featured image created with Dall.E, chart from Tradingview.com