Aggressive Bull Market Speculation on Ethereum Has Not Yet Begun, According to Analytics Firm Kaiko

Crypto analytics firm Kaiko says that speculative fervor on Ethereum (ETH) hasn’t yet kicked off, despite being well off its 2022 lows.

In a new report, Kaiko says that Bitcoin has benefited from the hype surrounding the approval of BTC exchange-traded funds (ETFs) in the US, but that speculation on an Ethereum ETF has not yet begun.

The U.S. Securities and Exchange Commission (SEC) has recently decided to delay its decision on banking giant Fidelity’s spot market Ethereum ETF application until March.

Says Kaiko,

“While there is some hype around ETH ETF applications, the data suggest that aggressive speculation hasn’t yet begun. ETH trade volume has spiked, but derivatives markets have lacked the telltale signs of traders positioning for a rally. ETH futures ETFs have also had a slow few months of trading.

ETH and BTC correlation has sunk to multi-year lows as each asset matures and develops its own narratives. While ETFs were one of the most catalyzing narratives in BTC’s history, it remains to be seen whether ETH will be able to replicate this. However, ETH has many narratives it can lean on; if ETFs don’t spur enthusiasm, perhaps new Layer-2s or the success of EigenLayer and restaking can.”

Kaiko says that derivatives data also indicates that recent ETH moves have largely been driven by spot markets rather than by perpetual futures, which the firm says provides evidence that traders are not using leverage in anticipation of an ETH ETF.

“September and October marked a low point in futures markets, with aggregated open interest (in USD) falling more than 20% from its summer levels. At this time, there was little price movement and funding rates were neutral…

Post-BTC approval, funding rates have reset to neutral, while open interest has surged ahead of price, indicative of increased shorting. Even still, we have not yet seen a major build-up in open interest that is typical of a bull market.” 

At time of writing, ETH is trading for $2,473.

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