Ethereum leveraged ETFs go live as price fails to react
|- Volatility Shares leveraged Ethereum ETFs have officially launched for trading on the Cboe.
- Ethereum options implied volatility surpasses Bitcoin as investors anticipate launch of spot ETH ETFs.
- Ethereum could see a new all-time high of around $5,000 following the official launch of spot ETH ETFs.
Ethereum (ETH) sustained its sideways trend again on Tuesday following the launch of Volatility Shares leveraged ETH ETFs and an increase in implied volatility across ETH options.
Daily digest market movers: Leveraged ETH ETFs increase Ethereum implied volatility
Ethereum surpassed Bitcoin in a key derivatives metric on Tuesday.
The 2x Ether ETF (ETHU) launched on Tuesday after the Security & Exchange Commission’s (SEC) approval as Fox Business’s Eleanor Terrett confirmed. The ETF, which is the first leveraged Ethereum ETF in the US, will track twice the price performance of futures ETH.
"Like our 2x Bitcoin ETF (BITX), ETHU may pave the way for 1x spot ETFs in the near future," said company cofounder Stuart Barton in an interview with Eleanor Terrett.
Also read: Ethereum sustains week-long consolidation, sees over $3 billion exodus from exchanges
Volatility Shares is one of the largest holders of Bitcoin futures contracts at the Chicago Mercantile Exchange (CME) after launching a Bitcoin 2x fund in June 2023. With ETHU's launch, many have speculated that the SEC will likely approve spot ETH ETFs S-1 registration statements in the coming weeks.
Meanwhile, according to QCP Capital, Ether options are experiencing high implied volatility compared to Bitcoin as the anticipation surrounding the launch of spot ETH ETFs is causing prevailing bullish sentiment among investors.
Implied volatility indicates how much the market expects the price of an option to change within a given timeframe.
"This bullishness is likely to continue as the market waits for the ETH spot ETF to usher in new demand. The options market certainly reflects this, with ETH vols still trading 15% over BTC vols," said QCP analysts.
ETH technical analysis: Ethereum to set new all-time high in next major move
Ethereum's horizontal trend is gaining strength daily as it continued moving sideways, trading at $3,796 on Tuesday. The consolidation has also seen a decline in ETH liquidations, with long liquidations at $6.33 million and shorts at $4.08 million.
With derivatives data indicating bullishness, ETH is unlikely to experience any major decline. The $3,618 level may prove crucial in case of a potential dip.
ETH/USDT 8-hour chart
ETH's next major move will likely follow an upward trajectory to break the $4,093 resistance. Considering ETH's current consolidation, it may see a major rally to a new all-time high of around $5,000 if or when the SEC gives the go-ahead for spot ETH ETFs' official launch.
Also read: Ethereum price lags, investors potentially reallocating capital after BlackRock's updated S-1 filing
ETH options data also aligns with this prediction, with several June call options hovering around the $5,000 level. The bullish thesis will be invalidated if ETH falls below the $3,301 key support.
Ethereum FAQs
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.
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