Liliya Filakhtova
Less than a week since the U.S. Securities and Exchange Commission gave the green light to the country’s first spot bitcoin exchange-traded funds, and it is ether, not bitcoin, that is capturing the spotlight within the cryptocurrency sphere. While bitcoin’s price action has faltered following the landmark approval, tumbling to $43.3K from around $46K, it is ether, the second-largest cryptocurrency, that has been making strides. As of the beginning of 2024, ETH has surged by 14.4%, outperforming bitcoin which has only nudged up by 3.7%, signaling a pivot in investor sentiment.
Investors appear to have redirected their attention to ether, fueling its ascent since the approval of 11 bitcoin ETFs. Speculation mounts that ETFs investing directly in ether are the next in line to receive the stamp of approval from the SEC. While bitcoin has experienced a protracted surge, surpassing 160% over the past year in anticipation of ETFs embracing the token, its recent weakness suggests that the bullish momentum may be set to pause momentarily. Nathan Leung, lead content creator at Cryptonauts, contends, “Now that the Bitcoin ETF is officially live, the public image and trust in Bitcoin is shifting towards a positive image. This will attract new investors and grow awareness. However, hype is temporary… and it’s safe to assume an Ethereum ETF will be engineered for another hype cycle.”
In a demonstration of substantive support, BlackRock CEO Larry Fink expressed his belief in an Ethereum ETF in an interview, asserting, “These are just stepping stones towards tokenization and I really do believe this is where we’re going to be going.” The asset manager’s iShares unit has already petitioned the SEC for registration of a spot ether ETF, in addition to launching the iShares Bitcoin Trust, one of the bitcoin ETFs that debuted in the U.S. on Thursday, accruing approximately $1B of the total $4.6B of trading volume.
Notably, BlackRock isn’t the only heavyweight entity backing ether, with other financial firms such as Grayscale, Invesco, VanEck, and Ark also awaiting approval for ether ETFs. Even though the optimism surrounding bitcoin ETFs had previously led to ether underperforming relative to its rival in 2023, the tides now appear to be turning in favor of Ethereum.
Aaron Rafferty, CEO of technology company StandardDAO, predicts a bullish trajectory for ether in the lead-up to potential ETF approval, stating, “If ETH is the next up, then it’s safe to expect a similar climb prior to the event.” Nevertheless, there are skeptics who anticipate a more arduous path for an ether ETF to receive approval, given SEC Chair Gary Gensler’s classification of all crypto assets, except bitcoin, as securities, thereby warranting compliance with securities regulations. “There are a number of applications in front of the SEC for ETH spot ETFs and we should have an answer in May of this year, and if denied I would expect those applicants to continue addressing the SEC’s concerns and try again,” remarked Chris Broderson, managing director at EisnerAmper.
An approved ether ETF would further validate cryptocurrency as an asset class. According to Broderson, this move would signify investors’ commitment to the asset itself, rather than the underlying technology, potentially paving the way for the packaging of other cryptocurrencies or baskets of cryptocurrencies into ETFs.
Further Insight on Bitcoin and Ethereum
