Bitcoin
Bitcoin eclipsed by Ether, Solana in crypto bets riding on ETF hype
(Bloomberg) — Bitcoin’s performance is starting to be overshadowed by Ether and Solana tokens as the excitement around U.S. cryptocurrency exchange-traded funds shifts to the two smaller digital assets.
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Solana saw its biggest rise in more than a month on Thursday after fund manager VanEck filed to start an ETF for the token. Ether has surpassed Bitcoin this year as final approvals for funds focused on the currency approach.
By contrast, Bitcoin hogged the spotlight in early 2024 when the first U.S. spot ETFs for the largest digital asset went live. Products from firms including BlackRock Inc. and Fidelity Investments attracted huge inflows, sending Bitcoin to a record high of $73,798 in March, but demand and price have since cooled.
The US Securities and Exchange Commission last month approved stock exchange proposals to list spot Ether ETFs. Some reports claim that final approvals for releases could come as early as next week.
Ether ETF Outlook
Analysts have begun to push back on tempered expectations about demand for ETFs holding the No. 2 token Ether, which is lesser-known than Bitcoin. The U.S. vehicles could attract $5 billion in net inflows in the first five months, according to Galaxy Digital Holdings LP and Fundstrat Global Advisors LLC.
“Sentiment surrounding the launch of the Ether ETF is very bearish,” Fundstrat head of digital asset strategy Sean Farrell wrote in a note. He predicts ETFs will get a boost from hedge funds pursuing so-called basis trading, which seeks to exploit discrepancies between the spot market and the futures market.
Ether has risen 49% since the turn of the year, exceeding Bitcoin’s 45% advance. Solana — also known as SOL — had already risen 754% in 12 months before Thursday’s gains and is ranked as the No. 5 digital asset.
U.S. Bitcoin ETFs have garnered $14.5 billion in net inflows since listing in January. JPMorgan Chase & Co. strategists estimated that future Ether portfolios will attract a “modest” $1 billion to $3 billion in net inflows over the rest of 2024.
SEC Position
The SEC surprisingly pivoted to approving spot Ether ETFs after grudgingly allowing Bitcoin funds following a court reversal in 2023.
While Bitcoin is viewed as a commodity, the agency under Chairman Gary Gensler argues that most other tokens are unregistered securities that should be subject to its oversight. Gensler has been ambiguous about whether Ether is a security.
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But Solana is one of more than a dozen coins that the SEC has singled out in various lawsuits as unregistered securities. That raises questions about whether the regulator would allow Solana ETFs. A registration like VanEck’s doesn’t mean the SEC will give the product approval for launch.
Bitcoin fell about 1% to trade around $60,850 at 11:27 a.m. Friday in New York. Ether dropped to $3,400 and Solana fell 5% to $142.
–With assistance from Suvashree Ghosh.
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