The highly anticipated ETH spot ETF commenced trading last evening, yet the expected market fireworks failed to materialize.
ETH volatility sold off across the term structures, and the premium of ETH to BTC vols on the frontend has finally reversed, with BTC 1-week and 2-week options trading at 1-3 points higher than ETH now.
Net inflows were $107 million on the first day of trading, as compared to $655 million for BTC, largely due to a $484 million outflow from ETHE.
We maintain a positive ETH outlook. BTC’s achievement of an all-time high two months post-ETF launch provides a compelling precedent. Anticipating sustained institutional interest, ETH’s price trajectory may gradually converge with its previous ATH.
Trade Idea
As the dust settles, we anticipate a decline in ETH volatility heading into the weekend. Since it is still at a decent level, we believe implementing an Accumulator strategy might be the best way to capitalize on this slow upward movement.
ETH Accumulator
Buy ETH spot at 10.1% discount (3,100) every week as long as spot is below 3,900.
- Maturity: 6DEC24 (20 weeks)
- Strike: 3,100 (-10.1%)
- Upper Barrier: 3,900 (+13.0%)
- Observation Frequency: Weekly
Spot ref: 3,450 ETHUSD