Ether, the second-largest cryptocurrency, has emerged as a major gainer following the approval of the first spot-Bitcoin exchange-traded funds (ETFs) by US regulators. Over the past 24 hours, Ether experienced a notable 9% surge, reaching $2,585, marking a 20-month high. In contrast, Bitcoin, despite a more than 160% increase in the past year, remained relatively unchanged at $46,070 as of 7:11 a.m. Thursday in London.
This discrepancy suggests that traders are speculating on the possibility that ETFs directly investing in Ether could be the next to receive approval from the US Securities and Exchange Commission (SEC). However, the current value of Ether may not fully reflect this anticipated development.
Bitcoin, on the other hand, had already witnessed a prolonged surge fueled by optimism surrounding the potential approval of ETFs directly investing in the largest digital asset. This has led to conjecture that the current rally for Bitcoin may be approaching a temporary plateau.
Richard Galvin, co-founder of Sydney-based crypto asset manager DACM, highlighted Ether’s size, liquidity, and existing CME futures as factors that could make a physical US ETF for Ether a viable possibility, drawing parallels with the successful Bitcoin model.
Ether, being the token of Ethereum, the most commercially significant blockchain in the crypto sector, allows investors to earn rewards through staking, a process where Ether tokens are pledged to help operate the blockchain. While technically complex, Ether ETFs could potentially stake their holdings, adding to the appeal of such products for investors. Currently, Ether staking yields an annual equivalent of 4.3% in additional coins.
The enthusiasm surrounding Bitcoin ETFs had contributed to Ether underperforming compared to its larger rival in 2023, with the Ether-to-Bitcoin price ratio at its lowest since 2021 at the beginning of the week. However, recent developments have led to an uptick in this ratio.
Laurence Smith, a senior strategist at Consensys, anticipates that the SEC’s approval for Bitcoin funds is just the beginning, suggesting that approval for an Ether ETF could be the next significant step.
On Wednesday, the SEC granted authorization for spot Bitcoin ETFs from major asset management players like BlackRock, Invesco, and Fidelity, as well as products from smaller competitors such as Valkyrie, to commence trading on Thursday. Notably, BlackRock, VanEck, Invesco, and 21Shares are among those actively seeking approval to launch spot-Ether ETFs.
