Solana
Ether Price Rebounds on ETF Speculation as Solana Rises
Ether has rallied over the past fortnight, outperforming Bitcoin. (ozgurdonmaz via Getty Images)
Ether (ETH-USD), the native cryptocurrency of the Ethereum blockchain, has recovered over the past fortnight, outperforming bitcoin. This comes as the US Securities and Exchange Commission (SEC) approves eight cash exchange-traded funds (ETFs).
On May 23, the SEC approved ether spot ETF applications from fund managers including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy and Franklin Templeton.
In the two weeks leading up to approval and thereafter, the value of ether increased by more than 28%, reaching $3,748 (£2,948) at the time of writing. In the same period, other major cryptographic tokens, bitcoin (BTC-USD) and Solana (SOL-USD) increased by 4.2% and 6.25% respectively, according to Coingecko data.
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Anticipation surrounding the impact of these ETFs has led to renewed investor interest. Derivatives market indicators show that many traders expect the value of ether to increase once these ETFs begin trading on major exchanges, such as the Chicago Board Options Exchange (CBOE), the 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 filings have already been approved by the SEC. This process can take anywhere from a few days to several months.
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Like the spot Bitcoin ETFs approved in January, traders expect that these financial products will open the door for traditional capital to flood the crypto market. Guidance for spot Bitcoin ETFs has been favorable so far, with fund managers, such as BlackRock (BLACK), raising nearly $20 billion since their launch in January. If this trend is reflected in spot ether ETFs and the token’s supply dynamics remain largely unchanged, this could lead to price appreciation for the digital asset.
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The SEC’s approval of ether spot ETFs has also generated more trading volume in the cryptocurrency market. However, unlike the rapid launch of Bitcoin ETFs, 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 activity commercial.
Ether should outperform Bitcoin
According to data from K33 Research, the ether/bitcoin ratio is increasing. It has been climbing 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 for ETF spot deposits . Investors interpreted this as a precursor to possible approvals.
Learn more: What is a spot Bitcoin ETF and why did it spark a crypto rally?
A rising ether/bitcoin ratio means that the price of ether is increasing relative to the price of bitcoin. K33 Research suggests that market conditions favor increased exposure to Ether, drawing parallels with Bitcoin’s price action prior to the launch of its ETFs and anticipating similar market behavior for Ether.
“Over the coming weeks, filers will be looking for investors to gain a solid foundation and traction for the eventual launch of the ETF. This supports continued relative strength in ether leading up to the ETF launch,” they said. noted analysts at K33 Research.
ETF Approval Could Boost Ether’s Credibility
The approval and early launch of ether spot 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 there is assurance that the financial product meets the SEC’s rigorous standards.
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Additionally, these ETFs will increase retail accessibility, making it easier for the general public to invest in Ether. SEC involvement also improves investor protection, making the asset more attractive.
Additionally, the potential for large investments from institutional entities, such as pension funds and mutual funds, could funnel billions into the crypto market, increasing Ether’s trading volumes. and overall market confidence.
Rise of Solana and increased institutional interest
Derivatives market indicators show that ether is going through a significant revaluation period, with price adjustments reflecting this new interest. This renewed interest is not limited to the ether; Other large market capitalization assets have also received increased attention as the market evaluates the potential of ETFs across a wider range of crypto assets.
Learn more: Live cryptocurrency prices
For example, while ether has been the focus of recent market activity, Solana, a competing layer 1 “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 is looking 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 crypto market is that trading volumes on the Chicago Mercantile Exchange (CME) for ether futures options have reached record levels, with with May volume exceeding $1.26 billion. This increase in trading activity signifies growing institutional interest, as evidenced by the growing open interest in ether futures on the CME.
Watch: What the debut of Bitcoin ETNs on the London Stock Exchange means for the European crypto market
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