The crypto market is experiencing a shift from Bitcoin-based products as Ether futures start trading at a premium. JP Morgan, an American multinational investment bank reveals how institutional investors are favoring Ether derivatives as opposed to Bitcoin Futures.
Growing Popularity of Ethereum-based Products
On Sept 22, analysts from the Wall Street bank noted that Bitcoin futures traded at a discount on the Chicago Mercantile Exchange (CME) when compared to spot BTC prices this month alone.
The world’s second-largest crypto asset is gaining traction as the popularity of Ethereum-based products is increasing among big investors. The JP Morgan analysts added that the market is experiencing a ‘strong divergence in demand’ and also claimed that:
This is a setback for Bitcoin and a reflection of weak demand by institutional investors that tend to use regulated CME futures contracts to gain exposure to Bitcoin.
It is common in the crypto ecosystem to see Bitcoin futures trading at a premium when demand is high over the spot markets. This occurs due to the enticing yields and high BTC storage costs for passive crypto investing. CME data shows that the 21-day average ETH futures premium climbed to 1% over Ether prices on the spot markets. JPM analysts noted that this is an indicator of much healthier demand for Ethereum vs. Bitcoin by institutional investors.
Why an Abrupt Focus on Crypto Futures?
Skew Analytics notes that the industry leader when it comes to BTC futures volumes is Binance, with $20 billion traded over the past 24 hours. After Binance come sin OKEx with $5.36 billion and then CME with $2.34 billion traded over the past 24 hours. Binance also tops the list when it comes to Ether futures, dominating by a daily volume of $9.7 billion.
Crypto aficionados are finding it ironic that JPM is focusing on crypto futures so abruptly on the same day a motion was filed in a Manhattan federal court ordering them to pay the Treasury futures investors $16 million after creating false demand, or ‘spoofing.’ An article from Law360 claims that this moves comes after JPM concluded their $290 million criminal settlement for manipulating commodities futures markets with the U.S. Department of Justice in September last year.
Looking into other institutional adoption news sheds light on the launch of two trust funds based on Ethereum and Bitcoin by Cambrian Asset Management based in California. According to Bloomberg, this will come as an advantage to the crypto ecosystem since the institutional investment products will bring better exposure to the underlying assets while cutting out some of the volatility.
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