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Analysis
08 Aug 2023

ETF momentum in ETH

14 different providers have filed for ETH ETFs under the 1940 act parole.
CME ETH and BTC OI
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The ETF momentum in BTC has had spill-over effects on ETH over recent weeks, as there currently are 14 active futures-based ETH ETF filings live in the U.S. All ETFs have filed under the 1940 Act parole, similar to the current U.S. futures-based BTC ETFs. Several of the filings aim to provide weighted exposure in BTC and ETH, which could catalyze further momentum in the market if approved. The current ETH filings will receive their verdicts from October 3 to October 18. Multiple providers applied for ETH ETFs in 2021 but withdrew their filings shortly thereafter, likely due to negative signals from the SEC. CME’s ETH futures market was nascent back then and had only been live for six months since February 2021. Now, CME’s ETH market has been live for 2.5 years, vastly improving approval odds. Nonetheless, CME’s ETH futures have been traded far less actively in 2023 than CME’s BTC futures. CME’s ETH OI currently sits at 150k ETH, consistent with the July 2022 OI, whereas CME’s BTC OI currently sits 30% higher than it did during H1 2022. Sticky inflows to BTC ETFs may explain some diverging trends, as passive ETF exposure tends to be held over longer time horizons.
cmebtcoi
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BTC ETFs impact on CME’s open interest
BTC’s open interest on CME averaged at 43,498 BTC from January 2020 to October 2021. The average OI since October 2021 sits at 70,384 BTC, 61% higher than the pre-ETF average. Consistently, ETFs have contributed to 50% of BTC’s open interest since its launch. Similar dynamics could unfold in a scenario with an ETH ETF approval, which in turn could increase CME’s market share in the ETH derivatives market currently sitting at a shallow 4.8%, compared to CME’s 18% market share in BTC.
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