Ether futures are currently trading at a premium as investors switch from Bitcoin-based products.
The American multinational investment bank JPMorgan has revealed that institutional investors are beginning to shy away from Bitcoin futures in favor of ether derivatives.
In a September 22 notice to investors, Wall Street bank analysts said Bitcoin futures traded on the Chicago Mercantile Exchange (CME) at a discount to BTC spot rates in September.
As a result, Ethereum-based products have grown in popularity as investors switched to the world’s second largest crypto asset. The analysts commented that there was “a large divergence in demand” before adding:
“This is a setback for Bitcoin and a reflection of weak demand from institutional investors who tend to use regulated CME futures contracts to gain exposure to Bitcoin.”
When demand is high, BTC futures typically trade at a premium over the spot markets due to high BTC storage costs and enticing returns for passive crypto investments, the analysts added.
According to CME data, the 21-day average ETH futures premium rose to 1% compared to ether prices on the spot markets. “This indicates a much healthier demand for Ethereum versus Bitcoin by institutional investors,” commented the JPM analysts.
According to Skew Analytics, Binance is the industry leader in BTC futures volume with $ 20 billion traded in the past 24 hours. OKEx ranks second at $ 5.36 billion and CME has only traded $ 2.34 billion in the past 24 hours by comparison. Binance also dominates ETH futures with a daily volume of $ 9.7 billion.
Ironically, JPM’s take on crypto futures surfaced the same day a motion was filed in federal court in Manhattan asking JPMorgan to pay $ 16 million to Treasury futures investors for making a false demand or created “spoofing”. According to Law360, the move follows the bank’s $ 920 million penalty settlement with the U.S. Department of Justice in September 2020 for manipulating the futures markets.
Related: JPMorgan is now offering its clients access to six crypto funds … but only if they ask for it
In other institutional adoption news, two Bitcoin and Ethereum trust funds were launched by Cambrian Asset Management, based in California. The institutional investment products provide exposure to the underlying assets but reduce some of the volatility, according to Bloomberg.
The company’s flagship crypto hedge fund, which trades 50 digital assets, is up 76% this year through August, while BTC was up 62% even in the first 8 months of the year.