Ethereum (ETH) ETF Buzz Attracts Traditional Finance Interest: Report

“Tradfi” may be beginning to rotate into the ETH ETF trade after two months.

As per a new report by Reflexivity Research, the annualized basis on CME has consistently increased, reaching over 18%. Bitcoin’s open interest in CME has also experienced continuous growth, surpassing $4.5 billion since the trend began two months ago.

Notably, an interesting pattern has emerged when comparing CME activities between Bitcoin and Ethereum.

• Velo Data’s analysis reveals that the futures’ basis for Ethereum on CME is currently trading at a 5% premium compared to Bitcoin, exceeding 20%.
• Furthermore, the open interest for ETH on CME has started to rise, albeit lagging behind Bitcoin’s initial surge.
• While it may be premature to confirm, there are indications that “tradfi” could be initiating a shift towards the ETH ETF trade after a two-month period.
• Similarly, the Grayscale discount is narrowing, dropping below 10% for the first time since July 2021. This decrease is indicative of growing demand for Bitcoin exposure and speculation regarding the potential approval of a Bitcoin ETF, along with the transformation of GBTC’s trust structure into an ETF.
• The report also noted a parallel trend in Grayscale’s ETHE product, as its discount to NAV is now below 15%.
• Meanwhile, the implied volatility in the options market has consistently decreased amid the gradual upward movement of both Bitcoin and Ethereum.
• However, there has been a slight increase in volatility for 1-week and 1-month periods during the recent rapid price surge.
• With volatility now below 60%, it may be considered attractive for an asset that typically trades up to 80% volatility and seems to be awakening from a period of dormancy.