On Tuesday, several major cryptocurrencies saw a rally, driven by news of increasing adoption and speculation surrounding the approval of the first Ethereum-centric exchange-traded funds (ETFs).
By the end of the regular trading session, Bitcoin (BTC) had surged by 4.5%, Ethereum (ETH) had gained 1.8%, and Dogecoin (DOGE) had climbed by 12.2%.
Bitcoin’s price surpassed $57,000 for the first time since December 2021, buoyed by record inflows into Bitcoin ETFs. CoinShares reported that approximately $2.5 billion flowed into digital asset investment products last week, with Bitcoin funds accounting for 99% of these inflows. This surge in capital followed the historic decision by the United States Securities and Exchange Commission (SEC) to approve the first 13 applications for spot Bitcoin ETFs.
These approvals marked the end of months of speculation after the SEC chose not to appeal a federal court ruling in August, which prevented Grayscale Investments from converting its Grayscale Bitcoin Trust into an ETF. With the onus back on the SEC, the approvals signaled a move forward in the Bitcoin ETF approval process.
Leading up to the SEC’s decision, traders took advantage of the broader crypto rally, recognizing ETFs as a more accessible investment option compared to traditional crypto accounts. ETFs can be traded throughout the day via online brokerages, eliminating the need for separate crypto accounts. Additionally, the approvals acted as a vote of confidence from a government agency in the legitimacy of crypto ETFs as an investment vehicle.
Despite an initial pullback after the launch of the first spot Bitcoin ETFs, the influx of capital from these ETFs, including the potential approval of an Ether ETF, could potentially increase the cryptocurrency market capitalization by over $1 trillion in the long term, according to CryptoQuant.
Looking ahead, crypto traders are focusing on May 23, 2024, the final deadline for the SEC to approve or deny spot Ether ETF applications from investment management companies like VanEck and Ark’s 21Shares.
