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Why Crypto altcoins appeared this week
A Ethereum (CRYPTO:ETH) exchange traded fund (ETF) was approved this week and that could open a floodgate of ETFs and funding for the cryptocurrency industry. At least that’s what the market was speculating this week.
According to data provided by S&P Global Market Insights, Uniswap (CRYPTO:UNI) has risen as much as 28% in the past week, while Lido picketed ether (CRYPTO: STETH) rose 25.3% and Referee (CRYPTO:ARB) rose 17.9%. The three tokens are currently trading up 21.7%, 18.9%, and 11.2% respectively as of 3:30 pm ET on Friday.
Ethereum gets its own ETFs
This week, the U.S. Securities and Exchange Commission, or SEC, approved an ad Ethereum ETF, following the approval of Bitcoin (CRYPTO:BTC) ETF earlier this year. This was a bit of a surprise to the industry because there had been questions about whether or not Ethereum would be seen as a commodity or a security. If it were a commodity, like Bitcoin, an ETF would make sense, but a stock would not have been approved.
The approval of an Ethereum ETF indicates that Ethereum is a commodity and it is likely that other crypto tokens will follow the same path. We could see this open the door to similar tokens that have similar features such as the ability to implement smart contracts on the blockchain.
Drag the sector forward
When Bitcoin ETFs were approved, the market spiked a number of tokens. This week’s move had the biggest impact on Ethereum-related tokens. Ethereum itself is up 20.9% over the past week and exploded as speculation about the ETF’s imminent approval began to circulate.
It is not surprising, therefore, that Lido Staked Ether followed suit and so did Uniswap, which is a decentralized exchange on Ethereum. More value and usage on Ethereum should be good for the ecosystem.
Arbitrum is a layer 2 blockchain, meaning it is built on top of Ethereum and aims to make Ethereum “more inclusive and sustainable” with scaling technology. Like other Ethereum-based tokens, an ETF could mean increased usage of Ethereum and/or an ETF that includes tokens like Arbitrum in the future.
Rising tide lifts altcoin boats
Like the Bitcoin-fueled rally earlier this year, the Ethereum ETF approval is causing speculation about what’s next from the SEC and the market. We know that Bitcoin ETFs have attracted tens of billions of dollars in investment, and it’s possible that Ethereum, which is the second-largest token by market capitalization, could do something similar. I don’t think it would be as popular as Bitcoin, but any increase in funds coming into the Ethereum ecosystem would be positive.
The story continues
What’s less clear is what happens next, and that’s where a lot of this week’s speculation comes from. Are altcoin ETFs coming? Will Meme Coins Get an ETF?
I think it’s clear that the SEC is easing its objections to cryptocurrencies after losing a series of legal battles, and that could open up the industry to more funding and, ultimately, long-term use cases. This is extremely bullish for cryptocurrencies, but there will be a lot of volatility on the path to a sustainable industry.
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Travis Hoium has positions in Ethereum. The Motley Fool has positions and recommends Bitcoin, Ethereum and Uniswap Protocol Token. The Motley Fool has a disclosure policy.
Why Crypto altcoins appeared this week was originally published by The Motley Fool