Futures Traders Flock to Ethereum as ETF Investors Rotate to Bitcoin

In brief

Aggregate 24-hour Ethereum futures volume climbed to $49.4 billion, topping Bitcoin’s $42.9 billion.
U.S. spot Bitcoin ETFs drew $1.39 billion in inflows over 10 days, while Ethereum ETFs lost $668 million.
Altcoins’ share of total trading volume rose to 50% this week, up from 40%, as Bitcoin’s dominance slipped.

Experts suggest growing anticipation ahead of key macroeconomic events this week has led to a stark divergence between futures traders betting on Ethereum and exchange-traded funds rotating their capital to Bitcoin.

Aggregate 24-hour futures volume for Ethereum reached $49.4 billion, surpassing Bitcoin’s $42.9 billion, data from analytics firm Coinanalyze shows.

The surge in speculative interest for the second-largest crypto contrasts with capital flows in the ETF space.

U.S. spot Bitcoin ETFs have notched a net inflow of $1.39 billion over the past ten days, according to data from SoSoValue.

Over the same period, spot Ethereum ETFs have seen outflows of $668 million, highlighting a rotational trade by institutional investors.

Stephen Gregory, founder of crypto trading platform Vtrader, told Decrypt that the divergence between the top two cryptocurrencies is typical, especially with the possibility of a half-point rate cut by the Fed, which is driving the shift in flows to Ethereum and altcoins.

“I think we’ll close Q3 on an uptrend led by altcoins,” he added.

Gregory’s outlook is echoed by Coinanalyze data, which shows altcoins’ share of total trading volume has jumped to 50% this week after consolidating around 40% for weeks. In comparison, Bitcoin’s volume dominance fell to 21% from 31%.

Gregory attributed the strong Bitcoin ETF inflows to “FOMO trading from new wealth managers finally allowed to allocate capital.”

As a result, the rotational trade has fueled a significant performance gap with Ethereum up 31% year-to-date, outpacing Bitcoin’s 19% gain, CoinGecko data shows.

While the futures traders show a growing interest in Ethereum and altcoins, the options market data reveals a more tempered outlook.

Implied volatility, which tracks the market’s future expectations based on options data, continues to remain low, Adam Chu, Chief researcher at GreeksLive, an options trading platform, told Decypt.

Despite the rate decision next week, he said, “the options market is pricing in relatively low future volatility, with a consensus that a 25-basis-point rate cut has already been factored in.”

“The overall market sentiment remains more favourable towards the fourth-quarter outlook,” Chu said.