“It’s All About ETH,” As It Outperforms Due to “Overwhelming Institutionalization” of Bitcoin

CME will launch Micro Futures of Ether today, the only crypto which is “not stretched to the downside” on technical metrics as legacy institutions take profits heading into year-end.


Following last week’s dump, crypto markets recovered some only to show weakness on Monday, with the majority of digital assets still struggling to make a recovery.

Ether showed the most strength among top cryptos as it went past $4,200 on Sunday, up from $3,585 low on Saturday, not “as negatively impacted by the hawkish language out of the Fed,” as per Stephane Ouellette, CEO and co-founder of FRNT Financial Inc.

While Ether today dropped back under $4,025, Bitcoin is now trading near $48,100. As such, ETHBTC is maintaining its position above 0.08. While down from 0.0857 high on Sunday, it is still at 0.0833.

“The rest of the crypto market recovers at a much faster pace than Bitcoin” from events that create macro uncertainty, Fundstrat head of digital-asset research Sean Farrell said in a note. According to Farrell, this shows the “overwhelming level of institutionalization of Bitcoin” and “as legacy institutions look to preserve annual gains heading into year-end.”

Today, the Chicago Mercantile Exchange (CME) will also launch Micro Ether Futures, sized at 1/10th of one Ether, just ten months after launching Ether futures earlier this year and eight months after Micro Bitcoin Futures were released.

“Think that from here on out, ETH absorbs some crypto native SOV premium from BTC. ETH has enough lindy now + positive momentum, which BTC doesn’t. Alt players in aggregate are increasingly less loyal to BTC as well, and all the DeFi/NFT/P2E innovation = more appreciation for ETH,” said Andrew Kang of Mechanism Capital.

Ether is also on its way to becoming an institutional darling as UBS, in its latest FX Strategy report, wrote, “It’s all about ETH.”

They noted that over the past fortnight, all major crypto registered better volatility-adjusted performance versus equities and gold. And while every crypto slipped slightly, ETH was the “exception.”

Ether “has outperformed and now screens as the only coin not stretched to the downside on our technical metrics,” they said.

Meanwhile, in a report published last month, James Malcolm, a top currency strategist at UBS, noted that crypto has the potential to diversify an investor's portfolio.

“One can now assert with considerable confidence that private digital currencies are here to stay and constitute a nascent asset class,” wrote Malcolm. And it doesn't matter if one wants to get involved or not because “it's going to be very difficult to avoid.”

Not to mention, a lot of mainstream companies are becoming more interested in digital assets, and they are only “going to be doing more things in crypto.”

However, according to him, crypto will still be a niche, alternative class that will have a fairly light-weighting in portfolios.

In his research, Malcolm highlighted regulation “likely to be positive, paving the way for widespread adoption and broader participation.” He also expects blockchain interoperability to be the “next big thing” in 2022.

As we reported recently, JPMorgan also called Ether a better and safer play than Bitcoin in its report. At the end of last month, the banking giant said, unlike Bitcoin, the rise in bond yields and the normalization of monetary policy are not putting downward pressure on Ether. Also, Ether is deriving its value from DeFi, NFTs, gaming, and stablecoins.

It wasn’t even the first time that JPMorgan backed Ether over Bitcoin. This has been going on since early this year when the bank’s analysts noted that the continued growth for DeFi and other components of the Ethereum-based economy brings bullish tailwinds versus bitcoin.

According to them, ETH 2.0 also brings additional opportunities to earn yield through staking, which will also be one of the factors to help crypto become “more mainstream.” “In fact, in the current zero rate environment, we see the yields as an incentive to invest,” analysts said in July.

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