The Market Watches Inflows and Potential Spot Ether ETF With the Approval of the Bitcoin ETF

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Last Updated on January 12, 2024 by Bitfinsider

The United States Securities and Exchange Commission (SEC) approved 11 spot bitcoin ETFs, a historic development that changed the regulatory environment for cryptocurrencies. Surprisingly, though, the market’s response to this eagerly awaited clearance was somewhat muted. The leading cryptocurrency, Bitcoin, didn’t show the predicted bullish spike; instead, its price movement was rather constant.

A number of factors, including market participants front-running the approval and two misleading announcements—Cointelegraph’s inaccurate report about Blackrock’s ETF and an incorrect SEC social media post—may account for part of the muted reaction to the approval of the bitcoin ETF. These factors may have made participants more cautious.

Unlike bitcoin, ethereum (ETH) saw a sharp increase in value, shooting up to $2,527 per unit just after the approval of the bitcoin ETF. The fact that this rise has broken above the resistance level at $2,400 suggests that the market is anticipating and may be ahead of schedule with approvals for ETFs based on Ethereum. If Ethereum’s price increase continues or if a significant portion of it retraces, that will be telling.

Following approval, attention will be immediately focused on the anticipated inflows into these ETFs over the ensuing weeks and months. “$14 billion of inflows into a Bitcoin ETF in the first year following an ETF launch, ramping up to $27 billion by the second year and $39 billion by the third year post-launch,” according to an estimate of possible inflows provided by Galaxy Research. “I expect $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,” Valkyrie co-founder and CIO Steven McClurg told Techcrunch. Lastly, on a recent Hidden Forces podcast, Vance Spencer, co-founder of Framework Ventures, one of the biggest venture capital firms in the cryptocurrency space, stated: “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, prospective spot ether ETF approvals will likely have taken center stage. A number of companies have submitted proposals for spot ether exchange-traded funds (ETFs), including Hashdex, Vaneck, ARK 21Shares, Fidelity, Invesco/Galaxy, Grayscale, and Blackrock. The SEC will make decisions between May and August 2024; the first decisions are anticipated in late May.

Though they have approved ETFs for ether futures, the SEC has not been eager to approve spot or mixed-type Ethereum products. Decisions on applications for ether ETFs, like as those from Hashdex and Grayscale, have recently been delayed, indicating the agency’s cautious attitude and request for further public input.

The approval of spot bitcoin exchange-traded funds (ETFs) is seen by analysts, such as Eric Balchunas of Bloomberg, as a signpost to the probable approval of spot ether ETFs, which are expected to be approved by May. A lawyer specializing in digital assets, Joe Carlasare, speculates that the SEC may adopt a more measured stance, establishing guidelines that may affect future ETFs for digital assets. However, as James Seyffart, an analyst for Bloomberg ETFs, pointed out in this X post, “All it takes is Gensler and SEC deciding to fight the battle of calling ETH a security.” or stating additional reasons why they don’t feel prepared.

The adoption of bitcoin ETFs has been a historic development, but the attention is now on ethereum and bitcoin ETF inflows. The cryptocurrency industry is anxiously anticipating the SEC’s ruling on spot ether ETFs.


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