According to a new Kaiko report, Ether could outperform Bitcoin following the launch of the highly anticipated Ether exchange-traded funds (ETFs) in the United States.
The report highlighted the Ether (ETH) to Bitcoin (BTC) price ratio, a metric that measures the amount of BTC required to purchase 1 ETH. The higher this metric climbs, the higher the price of Ether relative to Bitcoin and vice versa.
Currently, the ratio is at 0.05, compared to the 0.045 recorded before the Securities and Exchange Commission approved the spot Ether ETFs.
Ether’s 1% market depth was also cited in the report as a potential catalyst for an upcoming ETH bull run. Market depth measures the amount of liquidity in a market. Lower liquidity in an asset translates into higher volatility, while higher liquidity stabilizes market prices in the face of large orders.
This low market depth is supported by the Ethereum Exchange Reserve, a metric tracking the amount of Ether available for purchase on exchanges, which is at multiyear lows and could signal an incoming supply shock driven by institutional demand to fill their ETH ETFs, potentially sending prices significantly higher.
Ether ETF imminent
All eyes are on the launch of the spot Ether ETFs, which analysts say could happen sooner rather than later. Senior Bloomberg ETF analyst Eric Balchunas continues to forecast a July launch window. According to Balchunas, the SEC asked applicants to submit amended S-1 forms by July 16 ahead of a potential July 23 launch date.
Related: Whale transfers $50M in ETH amid ETF anticipation
Institutional investor Tom Dunleavy recently told Cointelegraph that he believes the Ether ETFs will see $10 billion in inflows at a rate of roughly $1 billion per month.
Regulatory controversy
Ethereum's status as a commodity or a security has been hotly debated in regulatory circles. In June 2024, the SEC dropped its investigation into the smart contract protocol, presumably to avoid embarrassment, professor Carol Goforth explained.
This should keep the SEC from continuing to target ETH as a security, according to Conensys attorney Laura Brookover.
More recently, Rostin Behnam, the chairman Commodities Futures Trading Commission (CFTC), argued that ETH is a commodity and falls within the purview of his agency.
Magainze: Ethereum restaking: Blockchain innovation or dangerous house of cards?
Update (July 17, 2024, at 14:16 UTC): This article has been updated to correct a quote misattributed to Consensys attorney Laura Brookover about the SEC dropping the investigation.