The continued divergence away from Bitcoin futures towards Ethereum futures is something to be concerned about, say analysts from JPMorgan.
The ongoing trend led to the multinational bank issuing a note over the weekend to its customers advising them of the potential largescale pivot that could ensue.
It follows a month of bad news for BTC. After peaking in value at around $52,000 its value has steadily dropped. The situation has been exacerbated by China’s blanket ban on cryptocurrency mining and the further announcement from the People’s Bank of China that made all cryptocurrency transactions illegal.
These actions, coupled with fears of a bear market, have wiped $150bn worth of combined value from the cryptocurrency markets.
As a result of this news, JPMorgan released a note, to customers indicating a “strong divergence in demand” from BTC futures to ETH futures.
“This is a setback for Bitcoin and a reflection of weak demand by institutional investors that tend to use regulated [Chicago Mercantile Exchange (CME)] futures contracts to gain exposure to Bitcoin,” the note read.
This comes after BTC futures traded below market value on the CME during September. This kind of trading, known as ‘discount’ trading, has led to investors moving to or diversifying from BTC to ETH throughout the month.
The pivot in investment to ETH has led to the 21-day ETH futures average value sitting at 1% above ETH’s actual market price.
The potential value for ETH is high. With continuing uncertainty for BTC the possibility of yet more investors moving across or simply diversifying their holdings increases.