Poor Week for Ether Prompts Research Firm to Reverse Outlook, Advise Favoring Bitcoin Instead

Initial action suggested only very modest interest in the first U.S. futures-based ether ETFs.

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  • Ether dropped to its lowest price compared to bitcoin since July 2022 as the launch of futures-based ETH ETFs attracted meager interest from investors.
  • Expecting ether to continue underperforming, K33 Research advised to rotate back to bitcoin.

The ether-to-bitcoin (ETH-BTC) price ratio dropped to a fresh 15-month low this week, confounding at least some who expected excitement around the Monday launch of futures-based ETH exchange-traded funds (ETFs) to generate buying interest.

The early returns show fairly sluggish volumes for these new investment vehicles. According to K33 Research, first day trading volumes on the ETH ETFs were just 0.2% of similar futures-based BTC ETF products launched in late 2021.

The ETH-BTC trading pair on key crypto exchanges Binance and Coinbase slid firmly below 0.06 this week near its lowest level since July 2022 and erasing what had been a modest rally for the ratio in September, per TradingView data.

What’s next for BTC versus ETH

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“The gravitational pull in crypto for the time being stays in BTC."
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Vetle Lunde, senior analyst at K33 Research

Ether is lower by 2.4% so far in October to $1,640, giving up all its gains and more from a short-lived surge on Monday to near $1,750. Bitcoin, meanwhile, gained 1.4% over the same time frame and is also outperforming ETH on a weekly, monthly and yearly basis, according to CoinDesk Indices data.

BTC has outperformed ETH so far this year (TradingView)
BTC has outperformed ETH so far this year (TradingView)

“We believe it’s time to pull the breaks on ETH and rotate back into BTC,” Vetle Lunde, senior analyst at K33 Research said in a Tuesday market report.

Lunde explained that the interest for the newly-listed futures-based ETFs in the U.S. had “strongly” missed his expectations, prompting him to ditch his month-old investment advice to increase ETH exposure compared to BTC to profit from the ETF hype.

“After an underwhelming futures-based ETH ETF launch, continuously poor momentum, and a lack of compelling medium-term narratives in Ethereum, I no longer favor overweight ETH exposure,” he said.

Given the lack of any short-term catalyst, apathy reigns on the cryptocurrency market and prices will likely continue chopping sideways, said Lunde This environment favors bitcoin which has medium-term positive catalysts in the forms of a potential U.S. spot BTC ETF listing and its four-year halving event early next year.

“The gravitational pull in crypto for the time being stays in BTC, with a promising event horizon down the line, still favoring aggressive accumulation,” he said.

Matrixport analysts said in a Wednesday market update that waning activity on Ethereum and its native token’s relapse to being inflationary could weigh further on ETH price. The crypto investment services firm said that Ethereum’s network revenues fell last month to its lowest since December when ETH traded at $1,200, suggesting that the token might be 30%-40% overvalued at current prices of around $1,600-$1,700.

BTC, meanwhile, could be seen as a “safe haven” asset at times of market distress, Matrixport pointed out, supporting its price as macroeconomic headwinds grow.

“There’s a strong case to be made for being bullish on bitcoin in the current environment,” Matrixport said in a Wednesday update. “However, it remains challenging to identify the fundamental catalysts that would support Ethereum or other altcoins, despite their upside potential if the bull market returns.”

Enigma Securities, an institutional digital asset liquidity and advisory firm, said in a Wednesday report that ETH currently is “in a rough spot” as ETH-BTC price ratio sunk firmly below the 0.06 level. What comes next for ETH’s price may lie in bitcoin’s performance, the report said.

“We will likely see stabilization and modest recovery in the short term should BTC improve,” Enigma head of research Joe Edwards wrote. “If we do indeed see momentum drop into November and prices in general start trailing downwards, expect to see ETH move outsizedly to the downside as part of that move towards ETH-BTC 0.05.”

Edited by Stephen Alpher.

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Krisztian  Sandor

Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.


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