Despite the historic approval of Ethereum ETFs by the US SEC, the cryptocurrency market remains gloomy with Bitcoin and Ether prices falling over the past 24 hours.
Ethereum ETF approval, a major milestone followed by a market downturn
This Thursday, May 24, Ethereum, the second-largest cryptocurrency in terms of market capitalization, reached a major milestone with approval by the U.S. Securities and Exchange Commission, key regulatory documents relating to Ether-backed ETFs.
No fewer than 8 ETFs, issued by asset management giants such as VanEck, Fidelity or BlackRock have been given the green light to trade on leading exchanges such as Nasdaq and NYSE.
However, it should be stressed that this approval does not mean that these financial products are immediately accessible to investors. If the SEC validated the form 19B-4 to issue and list these ETFs, a final step has yet to be taken: approval of the S-1 filings of the funds concerned. Only once this last formality has been met will investors be able to access these new Ether-linked financial instruments.
However, initial enthusiasm soon gave way to disappointment. After soaring by 20% in the space of a week, driven by anticipation of these approvals, the Ether finally fell by 4% following the official announcement. The recent rise in the upstream market was due to the market’s anticipation of this positive news.
Beyond the ETF setback Ethereum, the entire crypto market remains on a downward trend. The global capitalization has shed a further 0.3% in the last 24 hours to $2,720 billion.
Some observers also remain cautious about the real impact of ETFs on the market. Ethereum will have on demand. As the Ether market is much smaller and less familiar to the general public than the Bitcoin market, capital flows may prove more limited than for the first Bitcoin spot ETFs introduced in January.
Will Ethereum dethrone Bitcoin?
Despite the current market correction, several analysts see these ETFs Ethereum an opportunity for Ether to catch up with, or even overtake, Bitcoin in the coming months. Jim Bianco considers that the “regulatory freedom” obtained by Ethereum could enable it to reverse the trend against leader Bitcoin before the next “halving”.
For Bianco, the complete Ethereum ecosystem from staking to lending, offers many opportunities for traditional finance to take advantage of the platform, unlike Bitcoin. Numerous giants such as JPMorgan shares this opinion. Its CEO Jamie Dimon despite his criticism of Bitcoin, recognizes the potential of certain use cases of Ethereum.
Conversely, some of the biggest names in finance, such as BlackRock whose Bitcoin spot ETF is currently the best-performing, remain focused on the leading cryptocurrency. Its clients are said to be “massively interested in Bitcoin and a little in Ethereum” according to its head of digital assets.
The SEC’s approval of Ethereum ETFs was eagerly awaited, but ultimately failed to have the desired effect on prices. The cryptocurrency market remains sluggish, still weighed down by the difficult macroeconomic context, marked by persistent inflation and high interest rates.
As a journalist at Coinpri, I’ve been captivated by the world of bitcoin and blockchain since 2020. The decentralized aspect of Bitcoin particularly piqued my interest. Since then, I’ve been working constantly to spread my knowledge, hoping one day to see a world where everyone fully enjoys their financial freedom.
