Kaiko’s latest analysis suggests that Ether’s price will be sensitive to spot ETF inflows, given the low demand for futures products back in late 2023.
Following weeks of adjustments to registration statements, several spot Ethereum ETFs have been approved and will start trading on Tuesday. Ether’s price has not experienced any significant changes so far.
Kaiko suggests that in the coming days, the crypto asset will likely be “sensitive” to inflows from spot ETFs, especially given the tepid demand for futures products in late 2023. Traders also seem to be preparing for diverse outcomes.
Market Braces for Volatility
In a recent report this week, Kaiko’s head of indexes Will Cai noted that the futures-based Ethereum ETFs launched in the US late last year faced underwhelming demand. Now, attention is focused on the launch of spot Ethereum ETFs, with expectations of rapid asset accumulation. While it may take several months to fully assess demand, Cai mentioned that Ether’s price could be particularly “sensitive to inflow numbers of the first days.”
After briefly spiking in May following the approval of the 19b-4 rule, Ether has trended lower. It had previously tested levels around $4,000 in March; this was when Bitcoin reached record highs.
Over the weekend, Kaiko found that Ether’s implied volatility surged, with the nearest expiry contract on July 26 jumping from 59% to 67%. This spike suggests traders are less confident about the ETF launch, as they are paying higher premiums to hedge their bets.
Notably, this increase occurred before President Joe Biden withdrew from the election, indicating the rise is likely linked to the ETF launches rather than political factors. Meanwhile, implied volatility on contracts expiring in August remains above 65%, and for September 27, it stands at 70%.
‘Sell the News’ Anticipation Rises
The current state of the market hints at uncertainty and heightened expectations, which could imply that traders are bracing themselves for diverse outcomes, including the possibility of a “sell the news” event, as Kaiko hinted.
This narrative was also backed by QCP Capital’s latest post, which highlighted that the lack of a positive reaction in the market is itself a negative signal. The crypto trading platform also added that this sentiment indicates that traders are wary and waiting to see who will be the first to “sell the news.” It is this cautious stance that implies a lack of confidence, where the anticipation of a sell-off following the news is creating a tense atmosphere.
Earlier this week, pseudonymous crypto analyst ‘Kaleo’ predicted a “high likelihood” of a pullback after the debut of spot ETF. He even predicted that the altcoin could potentially see a plunge below $2,800 before a price discovery.
Source: www.cryptopotato.com