The bank’s representatives in a recent interview noted the fact that BTC futures on the Chicago Mercantile Exchange were trading below the market price of the cryptocurrency itself this month. All this makes ETH more attractive in the eyes of large investors. Let’s talk about the situation in more detail.
Recall that a futures contract is a contract that guarantees that a buyer buys an asset at a specified time and in a specified amount. The cryptosphere often uses perpetual futures that do not have an expiration date. Now the volume of open positions in futures exceeds that of the spot market, where traders buy and sell cryptoassets at market prices, that is, without speculation on the future value.
Can Ethereum Beat Bitcoin?
Bitcoin and Ethereum are the most popular digital assets for futures, since it is these cryptocurrencies that have the highest volume and liquidity in trading. The popularity of futures in itself is due to the ability to open positions on an asset with leverage , that is, to sell / buy an asset using the exchange’s borrowed funds against your own security.
According to Decrypt , the increased interest in Ethereum derivatives indicates “healthier demand for altcoin compared to Bitcoin.” Institutional investors play a special role in this – large organizations that may soon start pouring large capital into the ETH futures market.
By the way, it is easy to determine the ratio of demand for trading instruments: as a rule, the greater the positive difference between the futures price and the price of the underlying asset, the more popular the derivative. For example, if Bitcoin futures contracts have been trading below the coin’s market price for the entire month, Ethereum derivatives, on the contrary, are on average 1 percent higher than the ETH value in September .
At the same time, analysts found that the reserves of crypto exchanges in Ethereum dropped to 18.533 million ETH . Recall that this figure hovered around 23.92 million ETH almost a year ago. In the same period, the altcoin price was only 349 dollars , that is, a decrease in reserves can serve as a trigger for an increase in the value of an asset.
The logic here is simple – a decrease in stock exchange reserves indicates a massive withdrawal of coins from trading floors. This is because customers are withdrawing ETH to cold wallets for long-term storage, thereby reducing the pressure on the market from sellers. The stronger this trend, the faster the ETH rate will rise in the future. Despite the recent collapse of the crypto market, this fundamental factor speaks of the willingness of investors to hold the coin even in the most negative scenario for cryptocurrencies.
At the same time, the head of the US Securities and Exchange Commission, Gary Gensler, can create problems for the cryptocurrency market. He will seek to regulate the entire digital asset industry, Mike Novogratz, a billionaire and founder of the Galaxy Digital investment fund, said.
In a recent statement to The Washington Post, Gensler called cryptocurrencies “speculative assets,” whose fundamental value is based on investor expectations. In general, the head of the SEC, since his appointment to the post in April this year, made it clear that the cryptosphere will face rather tough regulation.
During this week’s Messari Mainnet conference, Novogratz touched upon the sensitive topic of cryptocurrency control. Here is an expert quote.
Gary is smart, there is no doubt that he is very smart. Also, no one doubts that he wants to regulate the crypt, hinting at it transparently. He wants to be his sheriff of the Cryptovillage.
In other words, Gensler expects that the SEC will have enough leverage to pressure the development of both Bitcoin and the entire ecosystem of popular altcoins as a whole. In his recent remark on the problems with the Coinbase exchange, he stated that many of the digital assets have the traits of securities, so the crypto industry needs to protect ordinary investors.
We believe that the current situation in the futures market is in any case good for the cryptocurrency niche in general. Whichever of the top coins is in the preference of investors, what happens in any case contributes to the popularization of digital assets. Therefore, the leadership of Bitcoin in these conditions is not important.