
The index of ETH/BTC fell to 0.05675 late Monday, its lowest since July 2022, according to trading platform TradingView. The ratio has declined by almost 30 percent since Ethereum implemented Merge in mid-September last year.
As many as six ether futures ETFs went into circulation in the U.S. last week, opening doors for traders looking to take exposure to the second-largest cryptocurrency without owning it.
The initial response has been tepid, with the big two - VanECK's EFUT and ProShares EETH - registering an average daily trading volume of $5 million in the first week, according to Paris-based crypto data provider Kaiko.
ProShares' first-day trading volume was $1 billion, a far cry from ProShares Bitcoin Strategy's $1 billion-a-day trading volume. ProShares' bitcoin futures ETF debuted in October 2021 at the height of the crypto bull run. Since then, the crypto market has been sluggish, with higher interest rates taking the wind out of the unprecedented risk-taking seen by the coronavirus-infected crash of 2020.
The ongoing impact of the bear market, which has historically led to traders turning to BTC, the oldest and largest cryptocurrency asset, is likely to cause sluggish performance. The rise in haven demand for bitcoin is evidenced by its dominance rate or the share in the total crypto market, which has increased from 41% to 51% this year.
Digital gold also is hurt by higher rates, but a bid is found in response to global fiat uncertainty and geopolitical risk, Magadini said in an email.
Last month, the Fed said it intends to retain the benchmark borrowing cost above 5% next year, having lifted the same by 525 basis points since March 2022 to control inflation.
With its inbuilt code on its blockchain, Bitcoin is frequently viewed as a digital gold in the crypto industry, as it reduces the rate of its supply expansion by 50% every four years. The fourth halving is expected to be announced next year.
The DeFi projects built on top of ETH are subject to regulatory scrutiny. If DeFi usage decreases in response to regulation, then the EIP-1559 Ultrasound money narrative suffers due to lower usage. The terminal value of ETH is significantly affected by the future of its issuance rate Flipping from net burn to net issuance, Magadini said.