As an analyst with extensive experience in the crypto market, I have witnessed the ebb and flow of various trends and events over the years. The launch of Ethereum ETFs was undoubtedly one of the most anticipated events this year, with high hopes for increased liquidity and stability in the market. However, the past few weeks have shown us that the story of Ethereum ETFs is not as rosy as that of Bitcoin ETFs.
Prior to the introduction of Ethereum-based Exchange-Traded Funds (ETFs) in July, there was widespread optimism that these funds would bring increased liquidity to the asset class. However, reality has not matched expectations as the flow of money into Ethereum ETFs has been minimal or even negative over the past few weeks.
Despite the fact that improved liquidity helped facilitate the introduction of bitcoin spot ETFs in January, the situation for Ethereum ETFs has been quite different. Since their debut on July 23, it’s been found that the liquidity on the Ethereum order book has decreased consistently, as evidenced by data monitored by CCData based in London. All U.S.-listed spot Ethereum ETFs have collectively experienced approximately $500 million in net outflows since their launch.
The data shows that following the ETF launch, the average 5% market depth for ETH pairs on US-based centralized exchanges has dropped by 20% and currently stands at around $14 million. Similarly, on offshore centralized platforms, the market depth has dropped by 19% to around $10 million. This drop shows that it is now easier to move the spot Ether price by 5% in either direction, which could lead to a liquidity drop and greater volatility during large trades. Speaking to CoinDesk, Jacob Joseph, a research analyst at CCData, said:
“Even though there’s more ETH trading liquidity on centralized exchanges now compared to the start of the year, it’s still down by about 45% from its high in June. This decline might be due to unfavorable market conditions and the typical summer slowdown, which usually leads to less trading activity.”
A smaller depth within an asset class tends to mean less liquidity and larger price differences (slippages), whereas a greater depth suggests increased liquidity and smaller price differences (slippages).
ETH Price Faces Selling Pressure
As a crypto investor, I’ve noticed that the recent attempts to bolster Ethereum (ETH) through Ether ETFs haven’t been as effective as we’d hoped. Today, the Ethereum price has been under pressure and dipped below the $2,400 mark, a trend that I’m closely monitoring.
125,000 Ethereum (ETH) options are set to expire this coming Friday. The put-call ratio stands at 0.63, meaning there are slightly more call options than put options. If these options reach their maximum potential impact point, it will be around $2,500 per option. This implies a total notional value of approximately $290 million for these options.
This week’s general vulnerability within the cryptocurrency market can be seen in the options data, as the maximum ‘pain point’ coincides with recent price drops, suggesting that adjustments have been slow to follow these declines.
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2024-09-06 17:09