Ethereum is likely gearing up to outrun Bitcoin (BTC) after the launch of spot ETH exchange-traded funds (ETFs), according to analytics firm Kaiko.
In a new report, Kaiko says the “mood in crypto markets is much changed” since May when the U.S. Securities and Exchange Commission (SEC) approved spot Ethereum ETFs.
“The mood in crypto markets is much changed from May, when the SEC approved spot ETH ETFs. Nearly two months on the new products have yet to begin trading, and ETH has fallen nearly 20% in the intervening period. That pullback doesn’t tell the whole story though, under the hood things appear to be primed for spot ETF launches.
The ETH to BTC, which measures the relative performance of the two assets, remains elevated around 0.05. This is significantly higher than pre-approval levels of near 0.045. A stronger ratio suggests ETH could continue to outperform relative to BTC following ETF launches.”
According to Bloomberg ETF expert Eric Balchunas, the ETH ETF will launch on July 23rd.
While the analytics firm notes the possibility that ETH could keep running higher against BTC, widely followed crypto analyst Benjamin Cowen says that the ETF launch won’t give Ethereum the boost that the market expects.
In a recent video update, Cowen said that Fed monetary policy is a larger driver of the price of ETH than the ETF and previous bullish narratives about Ethereum in the last several years.
“I ultimately don’t think the spot ETF for ETH will necessarily keep the ETH/Bitcoin valuation from staying at relatively low levels… There’s been so many narratives that have been given out over the last few years as to why the ETH/Bitcoin valuation would never go to even the current levels that it’s at… In 2022 when ETH/Bitcoin was at .08 BTC, if you had told them that it was going to go down into the mid-.04s BTC by 2024 they would have laughed at you…
We have these narratives about the transition from proof-of-work to proof-of-stake on this deflationary mechanism theoretically causing the Ethereum/Bitcoin valuation to ‘hold up well’ and that didn’t play out. And so it sort of gave us a glimpse into the idea that, hey, maybe this is more about monetary policy than it is about anything else.”
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