BRN analyst predicts a decline in the ETH exchange rate on the launch day of spot ETFs

Trading of new products in the United States will begin on July 23

22.07.2024 - 14:50

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The material is not an investment recommendation and is published for informational purposes only.

What’s new? Ethereum may face selling pressure after the start of trading in shares of spot exchange-traded funds (ETFs) based on it as a result of a sharp increase in implied volatility. Thus, derivatives market participants expect high ETH volatility due to the launch of ETH ETFs in the United States. BRN analyst Valentin Fournier predicts potential selling pressure on the launch day, followed by a gradual recovery.

Material by The Block

What else is known? On Friday, the Chicago Board Options Exchange confirmed that spot ETH ETFs from investment firms Fidelity, Franklin Templeton, and VanEck will hit the market on Tuesday, July 23.

The open interest in ETH options reflects the market’s expectation of an upcoming increase in price fluctuations. For example, according to analysts at crypto exchange Deribit, the implied volatility of ETH options has increased from 56% to 70% over the past week.

Fournier allowed the possibility that Ethereum will face significant selling pressure at the beginning of the week, and the launch of the ETF will not be able to immediately counter it. This prediction is consistent with the distribution of open interest in ETH options, where the put-call ratio rose to 1,45, according to Deribit data.

This indicates a higher number of put options compared to call options, suggesting that traders are anticipating potential immediate price declines or seeking to hedge against price declines.

In the long term, Fournier predicts that the price of ETH, after falling to the $2800-3100 levels, will return to the $4000 mark due to a gradual increase in demand for spot ETFs.

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