Ethereum, the second-largest cryptocurrency by market capitalization, has been making waves in the financial world. Recently, Ethereum future exchange-traded funds (ETFs) achieved a remarkable milestone, raking in a staggering $47.75 million in trading volume on Tuesday. This surge comes as investors eagerly await the potential approval of spot Ethereum ETFs by the U.S. Securities and Exchange Commission (SEC).
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The Bitcoin ETF Precedent
Before diving into Ethereum, let’s revisit the Bitcoin ETF saga. In early 2024, the SEC approved over 10 spot Bitcoin ETFs, leading to a dramatic rise in Bitcoin’s price. The market witnessed Bitcoin’s value soar from less than $30,000 in late October to over $48,000 in early January. These ETFs also attracted substantial investment, signaling a new era for cryptocurrency adoption.
Ethereum’s Journey
In 2023, Ethereum had a strong year, appreciating nearly 100%. However, its gains were overshadowed by Bitcoin’s meteoric rise of over 150%. The hype surrounding Bitcoin ETFs, coupled with other factors, propelled both Bitcoin and Ethereum higher throughout the year.
Now, all eyes are on Ethereum ETFs. According to Standard Chartered, the SEC could approve Ethereum ETFs on May 23, mirroring the timeline seen with Bitcoin ETF approvals. This final deadline for the first wave of applications holds significant weight, as it aligns with the Bitcoin ETF approvals. Standard Chartered’s analysis considers the SEC’s stance on Ethereum, which has not classified ETH as a security in other filings. Additionally, the Chicago Mercantile Exchange (CME) already lists and regulates ETH futures contracts.
Ethereum Upgrades and Price Speculation
Adding to the excitement, Ethereum is set to undergo upgrades in the first quarter of 2024. These upgrades aim to enhance scalability, speed, and security. The last upgrade in April 2023 provided a slight boost to Ethereum’s price. Combining the potential ETF approval, price run-up ahead of May, and the planned upgrades, it’s challenging to predict ETH’s exact trajectory. However, drawing insights from the Bitcoin ETF experience, we might witness a sharp price increase followed by a sell-off in May.
Market Impact
Reports of the SEC’s potential approval have already influenced the market. On Tuesday, Ether prices surged by 23% to $3,790, while Bitcoin rose by 5% to $70,350. If approved, Ethereum ETFs could open the market to institutional investors and generate interest in smaller cryptocurrencies like Solana and Avalanche.
Investors in the Grayscale Ethereum Trust may also benefit. Grayscale seeks to convert the trust into an ETF, closing the discount and providing immediate returns to investors.
As the SEC’s decision on spot Ethereum ETFs approaches, the crypto community holds its breath. Whether Ethereum follows in Bitcoin’s footsteps or charts its own course remains uncertain.
Reference:
https://finance.yahoo.com/news/ether-etf-hopes-drive-futures-074007317.html