According to Ethereum trends, it becomes more valuable as ETH2.0 gets closer. Institutional investors are eagerly awaiting the announcement. One sign is that ETH Futures trade with a higher base premium on CME than BTC Futures. For the past three months, ETH futures traded on a sliding basis that is higher than BTC futures. This could indicate that institutional investors are more optimistic about ETH’s future than BTC. ETH Futures trading is also high because of other factors.
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CME’s ETH Futures have been online since February. This means that the market has not had enough time to adjust to market conditions. BTC Futures investors have traded them on CME for four years, whereas they are still trading in the BTC Futures case. The market has had more time for market conditions to adjust to BTC Futures. It also has been able to adapt to the trading setups that allow spot and take-out trading to be the most efficient.
Higher ETH Futures basis than BTC Futures Basis | Source: CME Crypto Futures 3 Month Rolling Basis From Arcane Research
ETH Futures’ six-month-old status hasn’t allowed the market to establish the same patterns as BTC Futures. ETH Futures are still moving, and investors trade in a mature market that is still emerging. However, this is beginning to change.
Institutional investors require more exposure to ETH
ETH Futures had high base premiums when it launched. This is likely due to institutional investors using ETH Futures CME to gain greater exposure for ETH. The ETH Futures market has matured over time. As more trading firms take advantage of CME to spot trades and make them out, the basis for ETH Futures has been in a downward trend. Similar trend was observed with BTC.
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This is what the passage of time has shown us however contangoThe bottom is where it will grow. BTC’s base rose during a spike before finally stabilizing at 3%. The ETH base experienced an even higher peak and eventually stabilised at 7%. ETH futures have remained uptrending in the weeks that followed the peak of the current position.
The higher rise in ETH base than BTC bases shows that institutional investors are more bullish on Ethereum now than they were on Bitcoin. The basic trends between futures contracts place Ethereum on a higher trajectory that its Bitcoin counterpart.
Ethereum Institutional Interest – Price Movements
CME ETH futures don’t necessarily mean institutional investors are more interested. ETH price movements are also indicative of greater interest in the asset than the pioneering cryptocurrency Bitcoin.
Source:| Source: TradingView.com ETHUSD
This year, the price of ETH has outperformed Bitcoin’s by more than 200%. While Bitcoin’s performance for 2021 is down by 38%, ETH has performed 240% better. This disparity in performance is a sign that more investors are turning to Ethereum. This has led to a strong price growth in comparison to BTC.
With the upgrade of ETH 2.0, Ethereum continues to expand its use cases. It is the most popular network for DeFi and NFT. Its TPS rate is higher than Bitcoin’s. Switching to proof of stake will reduce grid energy consumption by 99%.
Featured image by The Cryptonomist. Charts from Arcane Research and TradingView.com.