Will an Ether ETF Approval Lead to Bitcoin-Esque Price Rise?

With the SEC poised to decide on spot ether ETFs, the Ethereum market anticipates a potential 60% surge.

A group of people pointing at an Ethereum Logo shining on the sky.
Created by Gabor Kovacs from DailyCoin
  • The SEC’s decision on Ethereum ETFs has loomed, potentially sending ETH soaring.
  • Analysts have predicted a 60% rally if approved, mirroring Bitcoin’s surge after its ETF debut.
  • Implied volatility for Ether has hinted at dramatic price movements in the near future.

The Ethereum market is on the edge of its seat as the U.S. Securities and Exchange Commission (SEC) inches closer to a decision on approving spot Ether exchange-traded funds (ETFs). This green light could send the world’s second-largest cryptocurrency soaring, with analysts predicting a potential 60% rally! But will it all go up in smoke if the SEC says no?

Ether Buying Frenzy Erupts as SEC Decision Nears

This bullish forecast echoes the market response seen earlier this year when spot Bitcoin ETFs received the green light. Following their launch in January, Bitcoin surged from $42,000 to over $73,000 within two weeks.

Sponsored

“The market is clearly expecting fireworks,” commented QCP Capital, citing Friday’s implied volatility for Ether exceeding 100%. This metric gauges investor expectations of future price fluctuations, hinting at potentially dramatic price movements. 

Further fueling anticipation, VanEck’s proposed ETF has been listed with the Depository Trust & Clearing Corporation, leading QCP to believe approval is highly likely, with trading potentially starting as early as next week.

On-chain analytics firm CryptoQuant confirms increased buying activity across both centralized and decentralized exchanges. Their Wednesday report highlights that holders scooped up over 100,000 ETH on Tuesday, marking the highest daily volume since September 2023. 

This surge coincides with news of a potential favorable SEC decision and analysts revising their approval odds upwards, with some exceeding 75% from a previous estimate of 25%. The excitement extends to Ether futures, where open interest has skyrocketed to a record $14 billion, representing a significant portion (67%) of the open interest for Bitcoin futures as of Wednesday.

Chart Showing Ether Inflows topping 100,000 on Wednesday. Source: CryptoQuant
Chart Showing Ether Inflows topping 100,000 on Wednesday. Source: CryptoQuant

 “Traders seem to be seeking greater exposure to ETH relative to Bitcoin,” CryptoQuant observes. CryptoQuant has highlighted this buying spree as the largest daily spot purchase by long-term Ether holders this year.

High Exchange Inflows and Potential Volatility

CryptoQuant warns of potential volatility in the coming days as investors transferred 62,000 ETH to exchanges, the highest amount since early March. Historically, high exchange inflows often precede price fluctuations.

While approval promises a potential windfall, rejection could trigger a “significant price correction,” the firm’s analysts caution. Notably, all six issuers vying for ETF approval, including prominent names like BlackRock, removed staking provisions from their proposals this week. 

This suggests that staking, a process offering passive income for locking up crypto, might have been a point of contention with regulators. As of Thursday, annual yields for staking Ether remain attractive, hovering around 3% according to data from Lido, a popular staking service. 

On the Flipside

  • A surge in Ether price due to ETF approval could be followed by a correction as early investors cash out their positions.
  • The SEC’s decision might not be clear-cut, with potential delays or limitations placed on the ETFs.
  • The actual impact of the ETF on Ether price might be less significant than anticipated, especially if the market has already priced in the approval with the recent pump.

Why This Matters

Beyond the potential price surge for Ethereum, a green light for spot ETFs would mark a significant step toward the mainstream adoption of cryptocurrency. This wider acceptance could bring increased legitimacy and stability to the entire crypto market, attracting new investors and potentially influencing regulations in a positive way.

If you’re interested in the future of Ethereum ETFs, this article discusses the SEC’s changing stance on approving ETFs and the concessions applicants are making:
Ethereum’s Vitalik Continues Railgun Romance With $300K Move

Are you interested in the future of Artificial Intelligence? This article discusses Vitalik Buterin’s concerns regarding the rapid development of AI:
Why Ethereum’s Vitalik Wants AI To Develop at a Slower Pace

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.