JPMorgan Chase: Institutional Investors Are Shifting From Bitcoin Futures To Ethereum Futures

U.S. multinational investment bank JPMorgan revealed that institutional investors have begun to shy away from Bitcoin futures and instead invest in Ethereum derivatives.

In a note to investors on Sept. 22, analysts at the Wall Street bank said bitcoin futures on the Chicago Mercantile Exchange (CME) traded at a discount to bitcoin spot prices during September.

As a result, ethereum-based products are gaining popularity as investors turn to the world's second-largest crypto asset. The analysts commented that "there is a wide variation in demand," before adding:

“This is a setback for bitcoin, reflecting weak demand from institutional investors, who tend to use regulated CME futures contracts to gain exposure to bitcoin.”

When demand is high, BTC futures typically trade at a premium compared to spot market prices due to high BTC storage costs and attractive yields on passive crypto investments, the analyst added.

According to CME data, the 21-day average premium of ether futures to the spot market ether price rose to 1%. The JPMorgan analyst commented: “This shows that institutional investor demand for Ethereum is much healthier than for Bitcoin.”

According to Skew Analytics, Binance is the industry leader when it comes to BTC futures trading volume, with $20 billion in volume over the past 24 hours. OKEx came in second with $5.36 billion in trading volume, while CME’s trading volume in the past 24 hours was only $2.34 billion. Binance’s ETH futures volume also dominates, with $9.7 billion in daily volume.

Somewhat ironically, on the same day that JPMorgan conducted its analysis of cryptocurrency futures, a Manhattan federal court filed a motion ordering JPMorgan to pay $16 million to investors in Treasury futures for creating false demand (“spoofing”). "). This follows the bank's $920 million criminal settlement with the U.S. Department of Justice in September 2020 for manipulating commodity futures markets, according to Law360.

In other institutional adoption news, California-based Cambrian Asset Management launched two trusts based on bitcoin and ethereum. According to Bloomberg, the two institutional investment products will provide exposure to underlying assets, but with some reduced volatility.

The firm's flagship crypto hedge fund, which trades 50 digital assets, has returned 76% this year through August, while BTC itself has gained 62% in the first eight months of the year.

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