Traders are positioning themselves for a surge in ethereum prices betting that Wall Streets top securities regulator will give the go ahead next year to an exchange traded fund ETF of United States to track the worlds second largest cryptocurrency.
Option prices tools that allow investors to bet on the future movements of financial assets suggest that market participants are betting that Ethereum will more than triple to reach 15000 in March of next year
The move came a week after the Securities and Exchange Commission SEC authorized the launch of the first bitcoin linked ETF Investors contributed more than 1 billion to the ProShares Bitcoin Strategy fund prompting it to buy futures contracts that track the price of bitcoin This in turn pushed the price of bitcoin to an alltime high
Traders are now betting that the stage for a repeat ETF of ethereum Simply put the market seems bullish about the potential ethereum end of the year or the first quarter said Luuk commercial director of Deribit one of the largest cryptocurrency options trading centers.
Buying interest has skyrocketed on traded derivatives contracts that give investors the right but not the obligation to buy Ethereum for 15000 in March next year according to Adam Farthing chief risk officer for Japan from trading company specialized in cryptography B2C2 Farthing said the timing of these bets suggested investors were optimistic about a similar decision for the second most widely used digital currency.
This flow started around the time the bitcoin ETF was confirmed and they are believed to be whales positioning themselves for an ethereum futures ETF announcement Farthing said referring to the large holders of the digital tokens
The launch of the ProShares fund followed by a similar product backed by futures from Valkyrie Funds has fueled expectations that the SEC will make a positive decision on the more than 20 applications being reviewed.
The SEC and the Commodity Futures Trading Commission CFTC have shown that they are going to be deliberate but openminded about the cryptocurrency related funds they are willing to allow and this past week has shown that there are demand for these types of products Steven McClurg chief investment officer at Valkyrie Funds
ProShares and digital asset manager VanEck had filed with the SEC to launch an ethereum ETF earlier this year but subsequently withdrew their plans Both ProShares and VanEck declined to comment on their motives Valkyries McClurg said that due to low trading activity in the ethereum futures markets waiting for regulatory approval before the end of next year was a long shot.
Joshua Lim head of derivatives at Genesis Trading said traders dropped positive bets on bitcoin and placed them on ethereum in the lead up to the approval of the ProShares ETF in an attempt to profit from a positive reaction in the price of ethereum if the SEC gives the go ahead.