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Bitcoin eclipsed by Ether, Solana bets on cryptocurrencies touching the ETF hype
(Bloomberg) — Bitcoin’s performance is starting to be overshadowed by Ether and Solana tokens, as excitement around U.S. cryptocurrency ETFs shifts toward the two smaller digital assets.
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Solana recorded its highest spike in over a month on Thursday after fund manager VanEck submitted an application to start an ETF for the token. Ether has overtaken Bitcoin this year as final approvals for coin-focused funds near.
In contrast, Bitcoin hogged the spotlight in early 2024, when the first US spot ETFs for the largest digital asset launched. Products from companies such as BlackRock Inc. and Fidelity Investments attracted large inflows, sending Bitcoin to a record high of $73,798 in March, but demand and the price have since cooled.
Last month, the U.S. Securities and Exchange Commission approved exchange proposals to list spot Ether ETFs. Some reports say final approvals for the launches could come as soon as next week.
Ether ETF Outlook
Analysts have begun to push back on muted expectations for demand for ETFs that hold the No. 2 token, ether, which is less well-known than bitcoin. The U.S. vehicles could attract $5 billion in net inflows in the first five months, according to Galaxy Digital Holdings LP and Fundstrat Global Advisors LLC.
“The sentiment surrounding the launch of the Ether ETF is far too bearish,” Sean Farrell, head of digital asset strategy at Fundstrat, wrote in a note. He expects the ETFs to get a boost from hedge funds pursuing so-called basis trades, which seek to exploit discrepancies between the spot and futures markets.
Ether has risen 51% since the start of the year, outpacing Bitcoin’s 45% gain. Solana, also known as SOL, had already risen 754% in 12 months before Thursday’s gains and ranked as the No. 5 digital asset.
U.S. Bitcoin ETFs have attracted $14.5 billion in net inflows since listing in January. JPMorgan Chase & Co. strategists estimate that potential Ether portfolios will attract a “modest” $1 billion to $3 billion in net inflows over the remainder of 2024.
SEC position
The SEC has surprisingly shifted toward approving spot-Ether ETFs, after reluctantly clearing Bitcoin funds following a court ruling overturned in 2023.
While Bitcoin is considered a commodity, the agency under Gary Gensler’s chairmanship argues that most other tokens are unregistered securities that should be subject to its oversight. Gensler has been ambiguous about whether Ether is a security.
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But Solana is one of more than a dozen coins that the SEC has identified in various lawsuits as unregistered securities. This raises questions about whether the regulator will allow Solana’s ETFs. A document like VanEck’s does not mean the SEC will give approval to launch the product.
Bitcoin rose about 0.5% to trade at around $61,700 as of 12.10pm on Friday in Singapore. Ether rose to $3,453 and Solana fell 1.5% to $147.
–With assistance from Suvashree Ghosh.
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