Investment bank JP Morgan said on Wednesday that Ethereum (ETH) futures are currently more popular than Bitcoin (BTC) futures, meaning there is now more interest in Ethereum among major investors, according to the reports.
Bitcoin vs Ethereum Futures
This change in interest is a “setback for Bitcoin,” according to a Business Insider report. Bitcoin futures on the Chicago Mercantile Exchange (CME) traded below the price of Bitcoin this month, the report said. According to JP Morgan, this was reportedly due to ‘weak demand from institutional investors’.
Bitcoin futures refer to when investors make bets and trade contracts that relate to the future price of the cryptocurrency and not to the actual asset itself. It is a huge market and there is more interest in it than spot trading (where investor buy and sell the cryptocurrency).
For example, the 24-hour volume at Binance, the world’s largest crypto exchange, for spot trading is currently around $23 billion. For futures trading, it is currently around $65 billion.
Investors can trade with futures from most major cryptocurrencies. Still, the largest assets by market cap – Bitcoin and Ethereum – are the most popular trading contracts. This is seen as a good way for old-school investors to get involved in the crypto market without having to deal with buying and storing real cryptocurrency. This can sometimes be somewhat confusing and burdensome for more traditional investors.
Higher demand for Ethereum from institutional investors
JP Morgan also reportedly stated in its investor note that the interest in Ethereum futures points to “healthier demand for Ethereum versus Bitcoin by institutional investors.” The company referred to large organizations, such as hedge funds.
When Bitcoin is in high demand, futures tend to trade at a higher price than the cryptocurrency. However, according to CME data, this was not the case in September.
Investors have been eyeing Ethereum since August. The average 21-day premium for Ethereum futures rose 1% more than the asset’s price, JP Morgan said. But despite this interest in futures, both cryptocurrencies are struggling. Bitcoin has fallen sharply in the past week and is trading around $42,200 at the time of this article. Ethereum also fell sharply and is currently trading at around $2,870.