Institutional investors are showing a “strong preference for Ethereum over Bitcoin.” This is the conclusion of a new report from JP Morgan, which analysts made based on a comparison of the price of futures of the respective cryptocurrencies with their spot markets.
With regard to Bitcoin, they write that due to the correction this month, the futures price fell again below the spot price, while in August it rose above it. According to JP Morgan, this ratio is “an obstacle for bitcoin and a reflection of weak demand from institutional investors who tend to use Chicago Mercantile Exchange (CME) regulated futures contracts to access bitcoin.”
As analysts explain, under normal conditions, when the demand for Bitcoin futures is not so low, contracts are trading above the market. This overpayment arises from the relatively low risk of gaining access to bitcoin through futures. Usually it is quite high and exceeds 5% in annual terms.
However, during periods of low demand and bearish expectations, futures start trading at a discount relative to the spot market. This was the case, for example, from May to July, and it is happening now. Ethereum futures, in turn, retain their overpayment, which surged to 7% in September.
The divergence of the dynamics of demand for derivatives of the two cryptocurrencies has been observed since August. The price of bitcoin has dropped by 10% over the past month, while the price of ether has dropped by 5%.
“This indicates a much healthier demand for Ethereum compared to Bitcoin from institutional investors,” the report’s authors conclude.
This is not the first time that analysts at a major bank have expressed such a point of view. In May, Goldman Sachs released a paper on cryptocurrencies, describing bitcoin as a little power and wasting tool while extolling ether as the future “Amazon of information.”
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