With Bitcoin ETF Approvals, Market Eyes Inflows and Potential Spot Ether ETF


The SEC’s approval of spot bitcoin ETFs marks a major milestone in cryptocurrency regulation, yet it’s ethereum that captures the market’s attention with a price rally, as investors and analysts now turn their eyes towards potential spot ether ETF approvals in the near future.

As SEC Ushers in New Era With ETF Approvals, Eyes on Bitcoin ETF Inflows and Ethereum’s Next Moves

In a historic turn of events, the United States Securities and Exchange Commission (SEC) approved 11 spot bitcoin ETFs, marking a milestone in the regulatory landscape for cryptocurrencies. However, contrary to expectations, the market reaction to this long-awaited approval was surprisingly subdued. Bitcoin, the flagship cryptocurrency, didn’t exhibit the anticipated bullish surge, with its price movement remaining relatively stable.

Some of the muted response to the bitcoin ETF approval can likely be explained by various factors, from market participants front running the approval, to two misleading announcements – Cointelegraph’s incorrect report regarding Blackrock’s ETF and an erroneous SEC social media post – making participants more cautious.

In contrast to bitcoin, ethereum (ETH) experienced a significant jump in price, rising to $2,527 per unit shortly after the bitcoin ETF approval. This increase, breaking the resistance at $2,400, points to the market’s anticipation and potential front-running of approvals for ethereum-based ETFs. It will be telling if ethereum’s price jump holds and grows, or if much of it retraces.

The immediate focus post-approval for the next weeks and months will be on the expected inflows into these ETFs. Galaxy Research released an estimate of potential inflows, concluding that, “$14bn of inflows into a Bitcoin ETF in the first year following an ETF launch, ramping up to $27bn by the second year and $39bn by the third year post-launch.” Valkyrie co-founder and CIO Steven McClurg told Techcrunch that he, ”expects $10 billion or more to enter spot bitcoin ETFs by the end of the year, with around $2 billion to $3 billion in the first anticipated week of trading.” Finally, Vance Spencer, co-founders of Framework Ventures, one of the largest venture capital firms in crypto, said in a recent Hidden Forces podcast:

Larry Fink is putting his reputation on the line to go out and get a bitcoin ETF done. If he has less than a billion dollars of inflows on the first day, I think he would consider that a failure.

By May, the focus will probably have shifted considerably to potential spot ether ETF approvals. Several firms, including Blackrock, Vaneck, ARK 21Shares, Fidelity, Invesco/Galaxy, Grayscale, and Hashdex, have filed applications for spot ether ETFs. The SEC’s decision deadlines span from May to August 2024, with the first decisions expected in late May.

Despite the SEC’s approval of ether futures ETFs, they have been hesitant to greenlight spot or mixed-type ethereum products. Recent delays in decisions on applications for ether ETFs, including those from Hashdex and Grayscale, indicate the agency’s cautious approach, seeking further public input.

Analysts like Bloomberg’s Eric Balchunas view the approval of spot bitcoin ETFs as a precursor to the likely approval of spot ether ETFs, with a high chance of approval by May. However, Joe Carlasare, a digital asset lawyer, suggests that the SEC might take a more measured approach, setting precedents that could impact future digital asset ETFs. On the other hand, as Bloomberg ETF analyst James Seyffart noted in this post on X, “All it takes is Gensler and SEC deciding to fight the battle of calling ETH a security. Or making other claims about why they aren’t ready.”

While bitcoin ETF approvals have been a landmark event, the focus now shifts to bitcoin ETF inflows and ethereum, with the crypto community eagerly awaiting the SEC’s decisions on spot ether ETFs.

Source : Bitcoin News by David Sencil / Jan 12, 2024

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