Despite being one of the most anticipated developments in the crypto space this year, the recent approval of spot Ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) came as a surprise to everyone.
With the uncertainty regarding Ethereum’s chances of getting its own spot ETFs finally laid to rest, and concerns about the altcoin’s prospects for the future having somewhat dissipated, it seems that the appetite for crypto assets is once again growing.
This means that more and more investors are interested in finding the best way to buy Ethereum or enriching their portfolios with other high-performing digital assets. The sense of excitement and optimism that has flooded the market following the arrival of spot ETH ETFs has had a positive impact on the price performance of several crypto assets, as many analysts deem it a major milestone in the evolution of the crypto industry.
Ethereum’s time to shine
Earlier this year, the news of spot Bitcoin ETFs being green-lit by the SEC after a long and strenuous road to acceptance caused huge waves in the market, pushing the Bitcoin price well beyond its previous all-time high. Several weeks after the SEC announced their momentous decision, the asset reached a new record of $73,750.
Unfortunately, Ethereum, despite being one of the oldest digital assets in the market and the second-largest crypto by market cap, failed to capitalize on the bull run triggered by the launch of spot BTC ETFs. The altcoin put in an underwhelming performance, recording only slight gains compared to the crypto leader.
However, after Bitcoin’s major win, anticipation started to grow about the potential emergence of spot Ether ETFs. Many argued that with spot Bitcoin ETFs already available for trading, there would be no solid reasons for the SEC to reject proposals for Ethereum ETFs. However, the SEC’s well-known anti-crypto stance prompted analysts to make pessimistic forecasts about the chances of acceptance for spot Ether ETFs, which seemed to diminish as the date of the decision approached.
Finally, on 23 May, in a stunning move that sent a shockwave through the entire crypto market, the US SEC gave the seal of approval for the first batch of spot Ether exchange-traded funds to be listed by Nasdaq, CBO, and NYSE. The commission responded positively to a total of eight ETF 19b-4 application forms filed by BlackRock, Fidelity, Bitwise, Grayscale, ARKInvest, VanEck, Franklin Templeton, and Invesco Galaxy.
Indeed, the precedent set by the introduction of spot Bitcoin ETFs in the market served as a main argument for lobbyists to pressure the SEC into giving the green light for spot ETH ETFs. Apparently, the influence exerted by both investors and lawmakers pushed the regulator to take an abrupt U-turn on Ether ETFs, leading to a much shorter acceptance process than in Bitcoin’s case.
As expected, the fateful decision caused the Ethereum price to surge by over 25% in less than a week, climbing to a two-month high just shy of the $4K threshold. Despite the slight correction that came afterward, Ethereum managed to stay within the upper limit of the $3K price range. At the time of writing, Ethereum was trading at $3,895, with a market cap of $468.04B.
The advent of Ether-based ETFs provides a new opportunity for investors to gain exposure to the altcoin, lowering the barrier to entry, which could spur greater interest in the asset in the long run. While issuers still have a final threshold to pass, as they need to wait for the approval of S-1 applications so they can start trading their new ETFs, experts agree it’s only a matter of time – most likely a few weeks or months – until these products become available to investors.
The big winners and the not-so-lucky coins
Although Ethereum took center stage both in terms of popularity and gains following this landmark moment for crypto, the confidence and optimism instilled by the SEC’s approval benefited the entire market, with the price of various digital assets rising across the board.
After Ether, Dogecoin experienced the biggest gains, increasing by 12% post-approval. The price of BTC, XRP, and BNB also went up after a period of relative stagnation, although their appreciation was much more modest.
This proves that the market sentiment is decisively bullish. The upward trend is also highlighted by the ETH Fear and Greed Index which was standing at 76 shortly after the approval, signaling strong investor confidence.
However, not all coins were as lucky as the ones mentioned above. For several crypto assets, the positive outcome on spot ETH ETF applications didn’t bring any improvements. On the contrary, Cardano and Solana registered losses of up to 2%.
Although it’s difficult to pinpoint the exact causes behind the price fall, it’s possible that investors focused on short-term trading might have had something to do with the downward fluctuation. Moreover, neither one of the tokens has a long track record in the market, so their price performance is less likely to be influenced by developments like the authorization of spot Ether ETFs.
Expectations for the future
Unsurprisingly, the SEC’s verdict on spot Ethereum ETFs has had a major impact on the price trajectory of digital assets. Now the question is what follows next. Most analysts are confident that Ethereum could mirror Bitcoin’s behavior following the approval of BTC ETFs, and surge to a new all-time high.
Others point out that these developments could encourage asset managers to apply for the establishment of new spot ETFs tied to other promising crypto assets, although so far there are none have expressed an intention in this regard.
Whatever the future might bring for Ethereum, Bitcoin, and the broader crypto market, there’s no denying that the recent ETF approval is regarded as a pivotal moment for the crypto industry, marking a new era of progress and wider acceptance of digital assets.