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BloFin anticipates that spot Ethereum ETFs will lead to a temporary increase in ETH values.
Crypto exchange BloFin is of the opinion that the upcoming introduction of spot Ethereum exchange-traded funds (ETFs) in the US will lead to a short-term increase in ETH prices as investors redirect their focus from Bitcoin to the second-largest cryptocurrency by market capitalization, as stated in a research note dated June 26 shared with CryptoSlate.
The exchange, referencing various indicators such as options skewness, portfolio modifications, and whale holdings, indicated that the launch of the ETFs is likely to enhance Ethereum’s short-term price.
BloFin analysts remarked:
“The relative strength of BTC has persisted for several months, but investors are altering their perspectives: they appear to believe that ETH’s performance will improve for a period following the listing of the spot ETH ETFs.”
Last month, the US Securities and Exchange Commission (SEC) approved significant filings for spot ETH ETFs, which took many market participants by surprise. Since that time, the ETH ETF applicants have been in discussions with the regulator’s staff, and there are speculations that these financial products could commence trading as soon as the first week of July.
Positive ETH outlook
BloFin noted that Bitcoin’s skewness data has been more optimistic than that of Ethereum for most of this year. However, this trend has shifted in recent weeks, with investors’ short-term outlook for Bitcoin now being “neutral” and “slightly bearish,” while expectations for Ethereum are more positive.
While investors continue to be optimistic about Bitcoin’s medium and long-term prospects, their enthusiasm for Ethereum has overtaken that of the leading cryptocurrency in the shorter time frames.
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The analysts pointed out that one factor contributing to this shift is the potential for greater returns. According to the note:
“Assets with relatively low market capitalization and relatively high volatility present a better opportunity for returns during the interest rate reduction cycle.”
BloFin also predicts that the “asset allocation period” following the approval of spot Ethereum ETFs will have a favorable effect on ETH’s price, akin to Bitcoin’s experience in February and March.
Moreover, the latest forward exchange rate term structure of ETH/BTC indicates that investors anticipate ETH will outperform BTC in the upcoming months, leading to a higher exchange rate in the short term.
The analysts stated:
“The Risk Premium difference between ETH and BTC has also narrowed to within 25[basis points], and investors are eager for the potential new wealth effect that ETH may bring following the listing of spot ETH ETFs.”
BloFin emphasized that on-chain data further reinforces its optimistic outlook. The firm noted that ETH whales have ceased selling their holdings, while BTC whales continue to decrease theirs.
This may be attributed to miners consistently selling BTC for cash, but it could also suggest that investors are rebalancing their portfolios.
The post BloFin believes spot Ethereum ETFs will drive short-term surge in ETH prices appeared first on CryptoSlate.
