According to analysts, Ethereum will outperform Bitcoin as the spot ETF narrative comes into play
Analysts at QCP Capital note that despite Bitcoin's rapid decline to $59,000, funding is back at reasonable levels and the more likely scenario is an outperformance of the ETH/BTC pair.
In a volatile overnight session, Bitcoin (BTC) quickly reached a new all-time high of $69,400, but then experienced a rapid decline, plummeting to $59,200 within hours. This sharp downturn led to the unwinding of over $1 billion worth of leveraged long positions on Binance alone.
However, as analysts at QCP Capital noted, the market quickly recovered as the decline was aggressively bought up and the $60,000 level provided strong support. According to analysts, funding rates have returned to “reasonable levels,” hovering around 30% annually at Binance. As such, analysts at QCP Capital expect Ethereum (ETH) to outperform Bitcoin, noting that the narrative surrounding a spot Ethereum exchange-traded fund (ETF) is gaining traction.
“[…] The likely scenario is ETHBTC outperformance when the ETH spot ETF narrative comes into play.”
QCP Capital
Despite the reduction in leverage, futures contracts are still trading at a significant premium to spot prices, analysts pointed out, adding that there has been an increase in customer activity aimed at selling the spot forward spread, particularly for contracts trading between will expire in September and December of this year. This means investors can secure risk-free returns all year round.
Top cryptocurrencies by market cap from their all-time highs | Source: CoinGecko
At press time, Ethereum is still well off its all-time high compared to Bitcoin, indicating potential for rapid appreciation. While Bitcoin is just 4.3% off its all-time high reached on March 5, Ethereum is over 20% short of its 2021 record, according to data from CoinGecko.
As the crypto landscape continues to evolve, Wall Street giants are ramping up efforts to launch more spot crypto ETFs after the US Securities and Exchange Commission (SEC) approved all applications for spot Bitcoin ETFs in early January. Discussions between the SEC and Ethereum ETF applicants are reportedly ongoing, with decisions on spot Ethereum ETFs delayed until May at the earliest. In particular, a response to VanEck's filing is expected by May 23, along with filings from BlackRock, Franklin Templeton Grayscale and Invesco Galaxy.
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