Lilia Filyakhtova
It’s been less than a week since the U.S. Securities and Exchange Commission gave the green light to the country’s first bitcoin spot trading funds, marking a milestone that is expected to attract more investors to the 15-year-old cryptocurrency. Since then, the price of Bitcoin (BTC-USD) Price action has been disappointing, falling to $43.3K as of Friday afternoon from around $46K at the time of approval.
Instead, investors appear to have shifted their focus to Ethereum (ETH-USD), the second-largest cryptocurrency, as the price of the token has risen since the liquidation of 11 Bitcoin ETFs. Since the start of 2024, ETH is up 14.4%, while Bitcoin (BTC-USD) is up 3.7%, as shown in this chart.
Market participants may be betting that ETFs that invest directly in Ethereum (ETH-USD) are the next to receive SEC approval. Bitcoin (BTC-USD) has been on the rise for months in anticipation of ETFs hitting the market, jumping more than 160% in the past year. But the weakness in Bitcoin since approval suggests that the months-long rally may be about to halt, at least for now.
“Now that the Bitcoin ETF is official, the public image and confidence in Bitcoin is shifting toward a positive one,” said Nathan Leung, lead content creator at Cryptonauts. “This will attract new investors and increase awareness. However, this hype is temporary… and it is safe to assume that the Ethereum ETF will be built for another hype cycle.”
BlackRock (BLK) CEO Larry Fink said he sees “value in having an Ethereum ETF.” CNBC in an interview on Friday, a day after the launch of the bitcoin ETFs. “These are just stepping stones into coding and I really think that’s where we’re going.”
Fink is not all talk. The asset manager’s iShares unit has filed an application with the Securities and Exchange Commission (SEC) to obtain registration for an Ether (ETH-USD) ETF. If that wasn’t enough, BlackRock’s iShares Bitcoin Trust (IBIT) (BLK) was one of the bitcoin ETFs that made its US debut on Thursday. The product has already taken in about $1 billion of the $4.6 billion in trading volume seen by the ETFs overall.
Other companies seeking ETF approval include: Grayscale, Invesco (IVZ), VanEck, and Ark.
Rising optimism around Bitcoin (BTC-USD) ETFs has led to Ethereum (ETH-USD) underperforming in 2023, with Bitcoin rising 165.1% compared to ETH’s 93.8% jump. Now, it seems that the tables are turning.
Aaron Rafferty, CEO of technology firm StandardDAO, expects Ethereum (ETH-USD) to see a similar rally as BTC ahead of potential exchange-traded fund (ETF) approval. “If ETH is next, it is safe to expect a similar rally before the event,” he said.
Some believe that approval of an ETF (ETH-USD) will be a more difficult feat, as SEC Chairman Gary Gensler views all crypto assets, with the exception of Bitcoin, as securities, and therefore subject to securities regulation. Bitcoin (BTC-USD) is considered a commodity by the Securities and Exchange Commission.
“There are a number of applications to the SEC for ETH ETFs, and we should have an answer in May of this year,” Chris Broderson said, “and if they are denied, I would expect those applicants to continue to address the SEC’s concerns.” And the stock market and try again.” , Managing Director at EisnerAmper.
He added that if such a product is successful, cryptocurrencies would be legitimized as an asset class, “where investors invest in assets, not in the underlying technology.” This could also pave the way for other cryptocurrencies, or baskets of cryptocurrencies, to be accumulated. In an ETF.