Crypto Traders Eye Ether Record, Rising Volatility From US ETF Hype

(Bloomberg) — Bets on further Ether gains are intensifying following a surprise move by U.S. regulators to allow exchange-traded funds for the digital asset, as questions swirl about the strength of demand for the products.

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That shift from the U.S. Securities and Exchange Commission catalyzed a 26% jump in the second-largest token in the seven days through Sunday, according to data compiled by Bloomberg; This is the largest weekly increase since the 2021 crypto bull market.

Read more: US Paves the Way for Ether ETFs in Beyond-Bitcoin Demand Test

Speculators may be encouraged by the record-breaking debut of US spot Bitcoin ETFs with $59 billion in assets in January. However, Ether is less well-known than Bitcoin, making it difficult to analyze investors’ appetite for exposure.

In addition, spot Ether ETFs will not participate in staking, the process of earning rewards by pledging tokens to maintain the Ethereum blockchain. Neglect threatens to reduce interest in funds compared to holding tokens.

BlackRock Inc. More SEC approvals are still needed before issuers like Fidelity Investments and Fidelity Investments can launch products for which the timeline is uncertain. Ether was up about 1% to $3,900 as of 8:38 a.m. Monday in London, while Bitcoin was little changed at $68,500.

“Risk on Ether remains to the upside and pullbacks are a buying opportunity,” Pepperstone Group Head of Research Chris Weston wrote in a note.

The charts below outline the scenarios following Ether’s 71% rise this year.

Bets over $5,000

The highest concentrations of bullish option bets indicate that some investors think Ether will climb to $5,000 or even higher, according to figures from trading platform Deribit. The current spot Ether record is $4,866 as of November 2021.

Volatility Ahead

The gap between the T3 Ether Volatility Index, which uses option prices to give a sense of expected 30-day volatility in the token, and a similar indicator for Bitcoin is around the widest level since at least the beginning of 2023. This suggests that speculators are expecting larger fluctuations in Ether than the largest digital asset.

Tips On Demand

Some analysts see the demand for futures hosted by Chicago-based CME Group Inc. as a window into the U.S. institutional appetite for regulated crypto risk. The level of open interest (or outstanding contracts) for CME Ether futures is increasing but much smaller than for CME Bitcoin futures, indicating less institutional interaction with Ether and perhaps by extension, possible Ether ETFs.

The story continues

“The relatively low participation of the same institutions, which are likely to flow into the Ether spot ETF post-launch, suggests initial inflows could be disappointing,” wrote Noelle Acheson, author of the Crypto Is Macro Now newsletter.

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