Crypto ETF launches could hurt assets’ price potential, analysts say

New ETH futures funds and planned bitcoin ETFs could keep trend of “squashing volatility and marking price peaks,” say Bloomberg Intelligence pros

article-image

24K-Production/Shutterstock modified by Blockworks

share

The introduction of ether futures ETFs might reduce market volatility, but could also dampen ether’s performance potential. Bloomberg Intelligence analysts suggest that such a trend typically emerges as an asset class matures.

Spot bitcoin ETFs could do the same for bitcoin if the US Securities and Exchange Commission approves such products — just as the futures contracts of crypto’s two largest assets have done in recent years.  

“It’s not unusual for high volatility and performance to subside in a nascent asset class as it migrates into the mainstream,” Bloomberg Intelligence’s Mike McGlone and James Seyffart said in a Wednesday research note. “Bitcoin and Ethereum US futures and [ETF] launches may continue the trend of squashing volatility and marking price peaks, particularly in an unfavorable liquidity environment.”

Fund groups VanEck, ProShares and Bitwise launched a combined six funds that invest in ether futures contracts on Monday. Competing firm Valkyrie added ether futures exposure to its Bitcoin Strategy ETF on Tuesday. 

Since ether futures started trading in 2021, the asset’s 260-day volatility has fallen from about 80% to just below 40%.

The first closing price of ether futures listed on the Chicago Mercantile Exchange (CME) that year was $1,752, the analysts wrote. The fact that price is about equal to its high in the first week of October “may have bearish implications for the crypto,” the Bloomberg Intelligence analysts said.

Ether’s (ETH) price was at about $1,645 at 5 pm ET on Wednesday. 

“The No. 2 crypto was on an upswing in 2021 and liquidity was positive,” McGlone and Seyffart noted. “Both have reversed.”

Ether futures ETFs could offer a short-term price boost, but allow greater access, “squashing volatility and performance potential,” they said.

“Sustaining above the 100-week mean at about $2,000 would be an initial sign of strength,” the Bloomberg Intelligence analysts added. 

Bitcoin ETF impact on volatility

The SEC is currently reviewing planned spot bitcoin ETFs — a type of fund some believe could see approval by early next year after Grayscale Investments’ court win against the regulator in August. 

Firms, including Ark Invest, VanEck and Invesco have also submitted spot ether ETF proposals. 

Bitcoin’s (BTC) annual volatility has dropped from about eight times the Nasdaq 100 stock index in 2017, when bitcoin futures started trading, to about two times the index today. 

“The long-awaited advent of spot bitcoin ETFs in the US come at a time when liquidity remains negative and risk assets face drawdown potential amid the risk of a global recession,” McGlone and Seyffart wrote. “When plugging bitcoin into most value-at-risk models, the facts of flat performance for about the past five years and more risk may weigh on reallocation decisions from equities, made easier via spot ETFs.”

The average daily price change for bitcoin has dropped from 2% two years ago to less than 1% now, according to Ruslan Lienkha, chief of markets at YouHodler.

“The current interest of financial institutions in crypto is just another iteration in the process,” Lienkha told Blockworks. “But the process started several years ago when the first crypto funds and firms appeared in the market, joining individual crypto enthusiasts.” 

Institutional investors, particularly those in the wealth management segment, still face barriers to accessing bitcoin, said Alex Thorn, head of research at Galaxy Digital.  

“Increased market access for institutions, facilitated by vehicles like ETFs, will enhance liquidity in bitcoin spot markets and, consequently, play a role in diminishing overall volatility over time,” he said.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

Research Report Templates (11).png

Research

Under current market conditions, stablecoins are paying compelling risk premiums multiples higher than the risk-free rate. Elevated premiums present a highly positive context for continued growth in the aggregate stablecoin supply and new inflows coming into the market to capture this elevated carry. Onchain money markets stand as primary beneficiaries of these market conditions and a forward outlook of a growing stablecoin supply. Similarly, Pendle’s PTs across a number of assets can provide attractive instruments to hedge variance and lock in a compelling fixed yield.

article-image

Sponsored

A next-gen blockchain offering 10,000 TPS, instant finality, and unparalleled developer incentives

article-image

BiT argues that Coinbase had ulterior motives to delist wBTC

article-image

Bitwise signaled its plans to list a solana ETF in the US less than a month ago

article-image

In the meantime, Trump will name either Commissioner Hester Peirce or Mark Uyeda as acting chair

article-image

Trump’s latest industry rendezvous featured a conversation with Crypto.com CEO Kris Marszalek

article-image

Unlike other BTC-pegged solutions, sBTC stays liquid — you don’t need to stake or lock it up to earn rewards