The Surge in Institutional Interest in Ethereum Futures – What Lies Ahead for ETH?
Interest from institutional investors in Ethereum (ETH) witnessed a significant increase in November, as seen in the record high Open Interest (OI) of 662,600 ETH (equivalent to around $2.5 billion) for CME Futures.
Indeed, data from K33 Research indicates a substantial surge from 350,950 ETH recorded on November 4, just before the recent U.S. Presidential elections.
ETH Nearing BTC Territory
By November 25, the volume of CME ETH Futures continued to rise, while the ETH annualized basis, which represents the premium received by hedge funds when purchasing U.S. spot ETH ETFs and shorting ETH Futures, also saw an uptick.
“CME ETH basis has recently surpassed BTC’s, a shift from its position of trailing behind BTC over the past few months,” mentioned Coinbase research analyst David Han.
Although the increased institutional interest could bode well for ETH’s price, the hedging strategies implemented by hedge funds may lead to higher volatility, especially with liquidations being a contributing factor.
Moreover, ETH’s gaining traction against BTC was evident in the ETHBTC ratio, representing the altcoin’s performance relative to BTC. Over the last week, ETH has attracted more investments, resulting in a nearly 15% surge in the ETHBTC ratio.
Consequently, ETH has outperformed BTC lately, notably during a downtrend in BTC’s price.
However, sustainability of this trend relies on the ETHBTC ratio decisively breaking above the 50-day Simple Moving Average (SMA).
Following an initial breakout in early November that led to subsequent underperformance, the current flirtation of the ETHBTC ratio with the 50-day MA raises questions about potential future movements in ETH’s favor.
As of now, ETH is trading at $3.4K, marking a 4% increase over the past 24 hours, with initial price targets set at $3500 and $3600.