The U.S. Securities and Exchange Commission (SEC) gave the green light to Ethereum exchange-traded funds (ETFs) on May 23, but actual trading of these instruments on U.S. markets will take longer as the regulator does not has not yet approved all eight. funds. Individual S-1 filings. Given the uncertainty, Ethereum (ETH) price has struggled to break above the $3,900 resistance, and the answer may lie in the Ethereum futures markets.
Ethereum Spot ETF Uncertainty Regarding Launch Date and Potential Releases
Part of the unease among Ethereum investors, even those who assume the launch of U.S.-active spot ETFs is imminent, stems from the conversion of the Grayscale Ethereum Trust (ETHE) to a spot instrument. If the fund manager decides to keep its $11 billion fund fees significantly higher than current levels, the likely outcome would reflect outflows from Grayscale’s GBTC, offsetting inflows from rivals such as BlackRock, Fidelity , VanEck and ARK 21Shares.
Some analysts have claimed that the SEC’s decision to approve Ethereum’s spot currency was heavily influenced by last-minute political pressure from Democrats to win over swing voters in next November’s US presidential election. . However, analysts noted that the SEC knew that the Ethereum instrument shared the same regulatory setup as Bitcoin ETFs, so according to Bernstein analysts, “the SEC took a more pragmatic approach and avoided the legal battle.”
Traders are wondering whether bullish bets are being made in the ETH derivatives markets or whether the price of Ether has been artificially suppressed due to the fact that bets on the Ether ETF are taking longer than expected. This uncertainty stems from mixed signals in the cryptocurrency market, particularly the recent actions of US President Joe Biden, who vetoed a congressional resolution to repeal the SEC’s SAB 121 guidelines, raising concerns over regulation of cryptocurrencies.
It is almost impossible to predict how long it will take the SEC to approve the necessary S-1 filings for each Ethereum ETF. Attention must therefore turn to trading metrics to understand whether traders are trending lower after several failed attempts to hold prices above. …$3,900. Perpetual contracts, also called reverse swaps, include a built-in rate that is recalculated every eight hours. In short, a positive rate indicates a buyer preference for using higher leverage.
Aside from a brief spike of almost 0.03% every 8 hours on May 21, which equates to 0.6% per week, Ethereum’s leveraged funding cost was minimal, meaning that There was balanced demand between long and short trades using perpetual contracts.
Monthly ETH Futures Reflect Slowly Fading Investor Optimism
To exclude externalities specific to perpetual contracts, one should monitor the monthly annual premium of ETH futures (base rate). These contracts rarely track the spot price of ether, as their longer settlement period requires sellers to demand a 5-10% premium. However, in hot times, this spread can easily reach 20%, as buyers are willing to pay a higher premium for leverage.
The monthly premium for Ethereum futures increased to 15% on May 21 after the Ethereum price hit $3,800. However, the moderate optimism began to fade on June 3 as the index returned to 13%, which remains slightly above the neutral threshold but does not constitute a sign of upside in the short term.
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This data does not necessarily mean that investors are not confident in launching an Ethereum ETF immediately, given the stricter regulations across the world. For example, Hong Kong banned unlicensed trading in the region, Paraguay confiscated unregistered cryptocurrency mining equipment, and two US senators claimed that Iran was using digital assets to circumvent sanctions, including to finance terrorist organizations.
Currently, ETH derivatives reflect low confidence in strong net inflows from US ETFs, whether the reason is due to delays in the regulator’s S-1 approval or fear of outflows from Grayscale’s ETHE instrument. Therefore, according to ETH futures prices, the chances of a rally above $4,000 in the near term are slim.
This article is intended for general information purposes and is not intended and should not be relied upon as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
