Ether futures entering discount territory on CME suggests bearish outlook: K33 Research

The ether futures market has entered discount territory, signaling an unusually bearish outlook on the Chicago Mercantile Exchange (CME) ahead of expected ether futures ETFs, according to crypto research firm K33 Research.

Ether futures have traded at a lower premium compared to bitcoin futures in recent weeks, with the gap widening over the past week, K33 Senior Analyst Vetle Lunde and Vice President Anders Helseth noted in a new report. Ether futures are now trading at a discount price compared to the spot market.

Below-average funding rates on perpetual contracts, combined with a 5% spike in open interest and options traders paying a premium for puts with shorter expiries further amplify the bearish sentiment, the analysts said. Perpetuals are similar to futures contracts but without an expiry date. A put option gives the holder the right, but not the obligation, to sell an asset at a specified price within a certain timeframe.

In their last report, Lunde and Helseth argued September and October favored more substantial exposure to ether than bitcoin, with the SEC said to be ready to greenlight futures-based ether ETF proposals. Ark Invest and 21Shares also filed a joint application for a spot ether ETF last week.

“With ether futures ETFs largely expected in October, which is considered positive, the ether futures discount is a little peculiar,” the analysts said. “There are no other signs of the ether ETFs being rejected, and the discrepancy between ether and bitcoin futures is not alarming based on history. Still, we will monitor this situation closely going forward.”

Ether is currently trading at $1,597, according to CoinGecko data, down 2% over the past seven days.

Bitcoin showing signs of increased volatility ahead

In terms of bitcoin, news flow regarding a spot bitcoin ETF approval slowed last week after the Securities and Exchange Commission delayed seven spot bitcoin ETF proposals from BlackRock, Fidelity, VanEck, WisdomTree, Invesco, Bitwise and Valkyrie until mid-October. Franklin Templeton’s spot bitcoin ETF filing yesterday was notable, however.

With a potential spot bitcoin ETF approval on the horizon, the analysts said they remain bullish over the coming year. However, Lunde and Helseth added that recent bitcoin price action is showing signs of increased volatility ahead, with the market fearing short-term selling pressure, influenced partly by FTX’s bankruptcy estate.

“This further adds to our belief that the coming period is a good time to accumulate,” they noted.

Bitcoin is currently trading at $26,158, according to CoinGecko, up 2% over the last week.

BTC/USD price chart. Image: CoinGecko.

Earlier today, U.S. CPI inflation figures for August came in line with expectations at 0.6% compared to 0.2% in July. It rose 3.7% year-over-year, slightly higher than the 3.6% forecast and up from 3.2% the previous month.

Core CPI figures, excluding food and energy costs, rose slightly to 0.3% compared to the expected 0.2% it also printed last month. Year-over-year came in line with forecasts at 4.3%, down from 4.7% in July.

The data had little impact on the crypto market, with bitcoin and ether trading flat most of the day.