Since all the media buzz targets Bitcoin, let’s examine the impact of approved ETFs on Ethereum

Here’s a scenario many envisioned but few genuinely believed in: Ethereum to be the greatest beneficiary of the SEC’s approval of spot Bitcoin exchange-traded funds (ETFs). Yet, the idyllic scenario turned the most modest aspirations into reality when Ethereum registered a 9% climb in price over the 24 hours after the news broke. Bitcoin, the actual star on the stage, has risen a little over the $47,000 threshold; yet, since it’s already registered a whopping 160% hike in price in 2023, it would be fallacious to claim that it hadn’t contributed a fair share of inflows to the already-colossal crypto market. To date, the largest quantum of inquiries are mainly about how to buy Bitcoin and other topics related to the leading cryptocurrency, with Ethereum landing the second spot in popularity.

What’s more apparent is that Ethereum took the world aback with its breakthrough after announcing the first BTC ETFs emerging onto the market. Bitcoin’s drawn much attention to date, and now Ethereum seems to be in the limelight. Let’s dive into the potential impacts and aftermaths of the recently approved ETFs for trade and see what it could mean in the long term.

Finally, ETFs in the US are tradeable

First and most importantly, let’s take a recap of the past events that led to all the noise and craze in the cryptosystem that’s seen today. After tiringly numerous postponements and detainments of the first spot BTC ETFs from the SEC, the regulators have finally come to terms with the possibility of legalizing and making them available for a wider audience to trade. The SEC didn’t approve one, but eleven submitted orders, each from a company. Financial heavyweights such as Invesco, Hashdex, ARK Invest, BlackRock, and more now have a free way to offer their investment products to the community. Even the BTC Trust from Grayscale received a green light.

Now that the dynamics in the crypto sphere are witnessing shifts and more focus on Bitcoin logically equals less attention to its counterparts, the world has few things left to do, including rejoicing over the merry news, reconsidering their investment strategies, and gaining insights into where Ethereum’s headed.

Ethereum ETFs in sight by May? Possibly

The approval odds for an Ethereum ETF are brighter now that the frontrunner has received the O.K. from regulators. Ethereum’s improved future performance is what the larger crypto community is now looking forward to if the ordinary course of action follows and the asset’s ETF gets similar permission.

With the leading crypto’s floodgates breaking wide open, expectations now revolve around a similar faith for Ethereum, and as pundits suggest, this scenario is pretty realistic. A representative from Bloomberg, a leading business and market analysis and news provider, indicated that in light of the most recent events, investors should prepare for another round of approvals by the end of Q2. Ethereum will be in the limelight this time, as it is “tied to the hip of the BTC spot.”, according to the affirmant. What’s more, he puts the odds of authorization by the fifth month at 70%. May represents the time of deadline for the regulators’ decision about the ETFs for Ethereum.

Ethereum prices display an inclination to grow in anticipation of the Ethereum ETF’s impending approval

Ethereum prices, as expected, were seized by a tendency to rise in price buoyed by the anticipation of a forthcoming Ethereum ETF approval by the end of Q2 of the year. Such a market newcomer would be a game-changing entry, so it’s normal to see more investors betting on the second-best token out there. As beliefs are that this financial product will be rubberstamped by the SEC next, both heavyweight players in the investment sphere like VanEck, Ark, Invesco, and BlackRock and enthusiast investors are waiting in line for another green light.

A long-held discussion on whether cryptos are regulated as commodities or securities is now over. Bitcoin’s label as a “non-security commodity” ranks among the main factors that convinced the SEC to approve the ETFs in question, so pundits place bets on a similar scenario happening for Ethereum, too. However, so far, the waters are muddier for Ethereum momentarily, as the asset is yet to be definitively applied for a status. If people look at Bitcoin as an apparent commodity, there are still questions regarding its frenzied counterpart.

Commodities and securities have different laws under which they’re governed, so before the SEC takes a stance on Ethereum ETFs, a status shall be provided for it. More likely than not, this scenario is bound to happen, being only a matter of “when” and not “if”.

A heads-up on how subject to missteps short-term traders are

Fear of Missing Out (FOMO) is universally accepted to be a well-rooted and influential element in the cryptocurrency realm that has a dangerous potential to play with communities’ intentions and actions, ultimately impacting the price of the asset in question to unmerited limits. Short-term traders are likelier to fall victim to news and speculations since they’re intrinsically basing their trading decisions on how the dynamics between the assets and those in the overall crypto market move.

When sticking to a long-term holding strategy, it’s almost impossible to be deceived by the media unless a disrupting event such as the failure of a bank occurs and pushes you to sell or move your crypto assets. However, it’s often easy to see why long-term trading is the successful method of approaching crypto, and a current and disheartening event has only emphasized the tendency of short-term traders to make rushed and doubtful decisions.

A fake announcement about a said approval of the first US spot Bitcoin ETF from the SEC hit the media some time ago, inevitably making a lot of noise around the assets. Many short-term traders jumped on buying the asset, thus leading to a lot of volatility in the market. This is an utter reminder of how vulnerable short-term traders are to news.

Similarly, it’s important to remember this occurrence when the media starts abounding in news about a potential ETH ETF approval not to fall prey to scams.

Take notice

Sham blogs and hoaxes may seep into the media, especially as Ethereum is now a star crypto, drawing a lot of attention and perhaps mal intentions, so keep your common sense sharp and know how to separate the chaff from the wheat.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.