June 23, 2024

Bitcoin and Ether — the two top cryptocurrencies by market cap — thrived on Tuesday on speculation that the Securities and Exchange Commission (SEC) would approve spot Ethereum ETFs this week.

The financial watchdog will decide whether to approve or deny Van Eck’s spot Ethereum ETF application on Thursday and the Ark 21Shares Ethereum ETF application on Friday.

Meanwhile, Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart have increased their approval odds for Ethereum ETFs from 25% to 75%. Balchunas posted on X that the SEC “could be doing a 180” due to increasing political pressure. Crypto has emerged as a political topic in this election year, with presidential candidate Donald Trump making several pro-crypto statements during a campaign in May. Moreover, President Joe Biden is also taking a pro-crypto stance to garner support from the crypto community.

On Tuesday morning, Bitcoin was trading at $70,000, with a nearly 6% jump, while Ether was hovering around $3,700, more than a 22% gain, according to CoinMartketCap. Ether’s market capitalization of $440 billion now has surpassed that of payment giant Mastercard, which is valued at $427 billion.

Ether ETFs will cause a crypto surge, says an expert

The Ether ETF approval signifies a narrative shift, providing another opportunity for digital assets to enter the market alongside major players, said Jonathan Thomas, CEO and co-founder of Blueberry Protocol, a DeFi (decentralized finance) platform.

In an email, he said the approval of Ether ETFs means that regulators see digital assets as something legitimate, while institutions see the benefit of offering crypto services.

“As we saw with Bitcoin ETF approvals, the market will become more bullish as well. There’s going to be a surge in buying activity and traders entering a ‘buy the news’ moment, which is likely to push Ethereum to an all-time high,” he said.

“The Ether ETF will also be the most profitable ETF for traditional finance as it includes the provisions for staking, and the asset itself will have a native yield.”

Why Ether is so important

Ether is the native token of the Ethereum blockchain network. The network is home to thousands of decentralized applications and financial services, where investors trade, borrow, and lend via automated software protocols rather than traditional banks or financial institutions.

Ethereum has some unique features that Bitcoin lacks that bolster its usability. For instance, Bitcoin’s blockchain network cannot be used as a platform for decentralized applications because it was not originally designed for applications to be built directly on its base layer.

This is part of the reason why financial giants such as BlackRock and Fidelity are eager to launch Ether funds, as they see Ether ETFs as a means to expand crypto’s investor base. In March, BlackRock launched its first tokenized fund on the Ethereum blockchain. BlackRock has consistently mentioned that its digital asset strategy involves launching ETFs and tokenizing financial assets.

​​Meanwhile, Grayscale CEO Michael Sonnenshein resigned on Monday, just a few weeks after the company withdrew its application for a futures Ethereum ETF. Goldman Sachs’ head of strategy, Peter Mintzberg, will become its new CEO in August.

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