Bitcoin ETFs Make Historic Entry into Wall Street, Stirring Up the Market

Quick Intro

Today marks the 15th anniversary of a significant moment in cryptocurrency history – a tweet from Hal Finney, a renowned cryptographer and the second person after Satoshi Nakamoto to run the Bitcoin protocol. His tweet simply read, “Running bitcoin,” symbolizing the early, almost unnoticed beginnings of Bitcoin in 2009.

Bitcoin experienced a surge in volatile trading on Thursday following the Securities and Exchange Commission’s (SEC) landmark decision to approve the first-ever spot Bitcoin ETFs in the U.S. The cryptocurrency saw an increase of 1%, reaching $46,289.15, with an earlier peak surpassing $49,000, a level not observed since December 2021. Simultaneously, Ether’s value jumped by 5%, hitting its highest point since May 2022, last traded at $2,594.60.

This ETF approval represents a monumental victory for the crypto industry, which has been aspiring to launch a Bitcoin ETF for over a decade. The momentum for this achievement had been building, especially since Grayscale’s significant legal victory against the SEC in August. Since the August decision, Bitcoin’s value has soared by 80%.

SEC’s Decision’s Impact on the Market

After the SEC’s decision, Bitcoin initially dipped, aligning with many traders’ expectations. While the future inflow volume into these new funds is still uncertain, Bitcoin ETFs are anticipated to significantly boost both the demand and price of Bitcoin.

Sylvia Jablonski, CEO and Chief Investment Officer at Defiance ETFs, commented on the market’s response: “We often see a pattern with ETFs impacting their underlying assets – a pre-launch increase, a post-launch sell-off, followed by a gradual rally. The immediate fluctuations in Bitcoin’s price might not be substantial, but the ETF approval is likely to drive long-term appreciation. The ease of trading on an exchange, without needing a digital wallet, makes Bitcoin more accessible, especially to institutions bullish on this asset class.”

Ether’s rise also bolstered other coins in the Ethereum ecosystem. Polygon’s token saw a 7% increase, Chainlink advanced 5%, and Uniswap rose 6%.

Conor Ryder, Head of Research at stablecoin company Ethena Labs, noted, “With the Bitcoin ETF now a reality, traders seem to be shifting their focus to Ether, anticipating a possible ETH ETF. Ether appears relatively undervalued compared to other tokens.”

The SEC is set to decide on spot ETH ETF applications starting in May. Firms like BlackRock, Invesco, Ark, VanEck, and Grayscale, aiming to convert its Ethereum Trust into an ETF, are in contention for approval.

Ryder added, “Bitcoin’s recent rally was fueled by ETF speculation. Now, with its approval, that narrative is complete. Meanwhile, Ether, which has been lagging, especially compared to smaller Layer 1 blockchain networks like Solana and Cardano, might be the next focus. Ether’s performance in 2023, with a 90% rise, hasn’t matched Bitcoin’s 157%.”

Future of Ethereum and Expectations for an ETH ETF

The crypto market is abuzz with the prospects of an Ethereum ETF following the success of Bitcoin ETFs. Industry experts anticipate that the approval of an Ethereum ETF could further catalyze interest and investment in Ethereum and its related ecosystem. This anticipated development could signify Ethereum’s growing stature in the cryptocurrency market, potentially leading to increased momentum for Ether compared to other cryptocurrencies.

Final Thoughts

The SEC’s approval of Bitcoin ETFs marks a turning point in the cryptocurrency market, potentially paving the way for other digital assets like Ethereum. While Bitcoin has seen significant growth, the focus is now shifting towards Ethereum and the possibility of an ETH ETF, indicating a dynamic and evolving landscape in the world of digital currencies.

Source: https://www.bloomberg.com/news/articles/2024-01-12/bitcoin-btc-etfs-take-wall-street-by-storm-with-historic-debut?embedded-checkout=true