K33 Research: ETH will outperform BTC after ETF launch

Author: Tom Mitchelhill, CoinTelegraph; Compiled by Wuzhu, Golden Finance

K33 Research analysis said that the launch of a spot Ethereum exchange-traded fund (ETF) could cause the cryptocurrency to outperform Bitcoin within weeks of its launch in the United States.

K33 analysts Vetle Lunde and David Zimmerman said in a report on July 2 that the ETF, which is expected to be launched as early as July 8, is a "source of wealth" for ETH prices, while Bitcoin will face selling pressure because creditors of the $8.5 billion Bitcoin exchange Mt. Gox will be returned starting this week.

For more than a year, ETH has been underperforming relative to Bitcoin, and this year's inflow of more than $14 billion in Bitcoin exchange-traded products has driven Bitcoin's gains to lead the market. Lunde and Zimmerman expect ETH to “fall immediately after the ETF launch,” but they note that — as later happened with Bitcoin — inflows into the fund could boost ETH’s price.

“With summer approaching and funds accumulating, an ETF is a solid catalyst for relative strength in ETH and I firmly believe the current ETH/BTC price is a bargain for patient traders,” Lunde wrote.

“We maintain our bullish ETH outlook, expecting net inflows equal to 0.75-1% of ETH circulating supply within 5 months of launch.”

The market remains “stubborn” to disagree with their stance, the analyst said, noting that Ethereum futures are trading at a relative discount to Bitcoin futures, while ETH’s price ratio relative to BTC is 1 ETH to 0.055 BTC.

ETH’s value has been steadily declining relative to Bitcoin over the past 12 months, hitting a yearly low of 0.045 on May 24.

ETH/BTC had been falling since last year until the ETH ETF was unexpectedly approved. Source: TradingView

According to data from TradingView, Ethereum's price quickly reversed relative to Bitcoin after the SEC's sudden decision to approve the ETH ETF, which surprised analysts and saw ETH/BTC rise to its current value of 0.055.

Nevertheless, Lunde and Zimmerman say that the current state of open interest in Ethereum futures is brutal, suggesting that many traders are using large amounts of leverage to bet on ETH’s potential price movement ahead of the ETF launch.

Open interest in ETH futures has increased significantly ahead of the ETF launch. Source: K33 Research