Ethereum surged 22% on Tuesday as confidence grew that an ETF tied to the cryptocurrency could be approved as early as this week.
Just as we did with Bitcoin in January, we are working to establish an Ethereum spot ETF to make this cryptocurrency accessible to a wider range of investors.
While investors have long expected resistance from regulators, the Securities and Exchange Commission recently asked potential issuers to update their filings ahead of decision deadlines for at least two spot ETFs, one from VanEck and the other from Ark 21Shares, according to Bloomberg.
The odds of approval in a single day jumped to 75% from 25% on Monday, said Eric Balchunas, an ETF analyst at Bloomberg Intelligence.
Geoff Kendrick, head of foreign exchange research at Standard Chartered Bank, said that ETF approval would solidify Ethereum’s chances of reaching $8,000 by the end of the year.
He has maintained his bullish prediction since March, arguing that the fund’s approval will drive $15 billion to $45 billion worth of capital into the token. Ultimately, he reiterated in new research on Tuesday that ether could hit $14,000 by the end of 2025.
Furthermore, he added, an ETF would largely avoid the same situation as bitcoin funds, which saw outflows and considerable price volatility after an initial boom period.
First, Kendrick said inflows will be minimal because ether lacks investment alternatives that can compete with ETFs, such as Microstrategy, which owns a large amount of bitcoin, meaning its stock price moves in tandem with the coin.
Secondly, Kendrick noted that large-scale outflows are unlikely to be a problem for Ether either. This was a challenge for Bitcoin, as the launch of a Bitcoin ETF saw these funds become a major competitor to the pre-existing Grayscale Bitcoin Trust, leading to a round of selling.
“The Grayscale ETH Trust represents a smaller percentage of market cap than Bitcoin, so any forced selling of Bitcoin following ETF approval should be less significant,” Kendrick said in written comments.
Kendrick added that the highs that ether prices could reach once the fund is established would bode well for bitcoin, which has risen 6.7 percent this week, led by ether’s gains.
“Approval of an ETH ETF would further legitimize the industry and therefore be positive for Bitcoin as well,” Kendrick wrote.
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