News
Ether price rises due to speculation on spot ETF launch as solana rises
Ether has rallied over the past two weeks, outperforming Bitcoin. (ozgurdonmaz via Getty Images)
Ether (ETH-USD), the native cryptocurrency of the Ethereum blockchain, has rallied over the past two weeks, outperforming bitcoin. This comes as the US Securities and Exchange Commission (SEC) approves eight spot ether exchange-traded funds (ETFs).
On May 23, the SEC approved applications for spot ether ETFs from fund managers including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy and Franklin Templeton.
In the two weeks leading up to the approval and thereafter, the value of ether increased by more than 28%, reaching $3,748 (£2,948) at the time of writing. Around the same time, other major crypto tokens, bitcoin (BTC-USD) and solana (SOL-USD) increased by 4.2% and 6.25%, respectively, according to Coingecko data.
Anticipation for the impact of these ETFs has led to an increase in investor interest. Derivatives market indicators show that many traders expect ether to increase in value once these ETFs start trading on major exchanges, such as the Chicago Board Options Exchange (CBOE), Nasdaq (^IXIC) and the New York Stock Exchange (^NYA) in the coming weeks or months.
Trading ether ETFs on exchanges depends on completing specific filing documents, called S-1 registration statements, even though their 19b-4 filing documents have already been approved by the SEC. This process could take anywhere from a few days to several months.
To know more: Bitcoin Price Drops Ahead of FTX and Mt Gox Bankruptcy Payments
Like the spot bitcoin ETFs approved in January, traders predict that these financial products will open the door for traditional capital to flood the cryptocurrency market. Guidance for spot bitcoin ETFs has been favorable so far, with fund managers like BlackRock (BLK), awarding nearly $20 billion in inflows since their launch in January. If this model is reflected in spot ether ETFs and the token supply dynamics remain essentially unchanged, this could lead to an appreciation in the price of the digital asset.
The SEC’s approval of spot ether ETFs has also generated increased trading volume in the cryptocurrency market. Unlike the rapid launch of bitcoin ETFs, however, which began trading shortly after approval, ether ETFs could take weeks or months to go live, but this delay appears to have fueled speculation and trading activity. trading.
The story continues
Ether is expected to overtake Bitcoin
According to data from K33 Research, the Ether/Bitcoin ratio is increasing. It has risen steadily since hitting a multi-month low of 0.045 in mid-May, before the SEC surprised the market on May 20 by requiring sudden changes to detect ether ETF filings. Investors interpreted this as a precursor to eventual approvals.
To know more: What is a bitcoin spot ETF and why has it triggered a cryptocurrency rally?
A rising ether/bitcoin ratio means that the price of ether is rising relative to the price of bitcoin. K33 Research suggests that market conditions favor greater exposure to ether, drawing parallels to bitcoin’s price action prior to the launch of its ETFs and anticipating similar market behavior for ether.
“The coming weeks will see depositors pursuing investors to secure a solid seed and traction for the eventual ETF launch. This favors continued relative strength in ether leading up to the ETF launch,” K33 analysts noted Research.
ETF approval could boost Ether’s credibility
The approval and early launch of spot ether ETFs could boost confidence and trading volumes for the digital asset. This regulatory oversight has the potential to lend credibility to ether as an investment, now that the financial product is guaranteed to meet rigorous SEC standards.
To know more: What are bitcoin rune carvings?
Additionally, these ETFs will increase retail accessibility, allowing the general public to invest in ether more easily. SEC involvement also improves investor protection, making the asset more attractive.
Additionally, the potential for significant investments by institutional entities, such as pension funds and mutual funds, could funnel billions into the cryptocurrency market, boosting Ether trading volumes and overall market confidence.
Solana’s surge and the increase in institutional interest
Derivatives market indicators show that ether is undergoing a period of significant revaluation, with price adjustments reflecting this new interest. This renewed interest isn’t limited to the ether; Other large market cap assets have also received more attention as market prices represent the potential for ETFs across a broader range of crypto assets.
To know more: Real-time prices of cryptocurrencies
For example, while ether has been the focus of recent market activity, Solana, a competing layer one “smart contract” blockchain, has also seen a notable price increase. The Solana blockchain offers market participants high-speed transactions and lower settlement fees than the Ethereum network, making it a formidable competitor. Solana aims to post returns of 35-40% by the end of the month, its best monthly gain since December 2023.
Another sign of a notable increase in institutional participation in the cryptocurrency market is that trading volumes on the Chicago Mercantile Exchange (CME) for ether futures options have reached record highs, with May volume surpassing 1, 26 billion dollars. This increase in trading activity indicates growing institutional interest, as evidenced by the growing open interest in ether futures contracts on the CME.
Watch: What the debut of Bitcoin ETNs on the London Stock Exchange means for the European cryptocurrency market
Download the Yahoo Finance app, available for Apple AND Android.