Bitcoin
Why could the Ethereum ETF trigger a bigger crypto rally than the Bitcoin ETF?
The crypto community is full of speculation and expectations as the SEC accelerates the review of Spot Ethereum ETFs. We explain how the approval of Ethereum ETF it would have a huge impact on Ethereum and the broader crypto market.
In May, the cryptocurrency market discussed the possibility of Ethereum being labeled as a security. However, the odds have changed with speculation of ETH ETF approval. Bitcoin price rose above $70,000, while Ethereum saw a double-digit rise, rising above $3,500.
The odds of Ethereum ETF approval increased significantly, with Bloomberg analysts Eric Balchunas and James Seyffart increasing their probability estimate from 25% to 75% in the final hour.
Ethereum ETFs Impact on ETH and Altcoins
ETF approval could significantly impact ETH price; while Bitcoin’s market capitalization is $1.3 trillion, Ethereum’s is just $376 billion, making it much easier for Ethereum’s price to rise. Additionally, there is not much ETH available for purchase; current supply on exchanges is at an all-time low, just 9.9% of total supply.
Unlike Bitcoin, Ethereum does not have miners, adding supply to the market. Since the Ethereum network transitioned to a proof-of-stake mechanism, ETH has been deflationary, reducing supply. Many people hold ETH in different ways, such as staking, farming, using it as collateral, or for decentralized finance (DeFi) activities.
Due to these factors, very little ETH can be easily purchased to satisfy potential demand from traditional (tradfi) financial investors. Even if the inflows into ETH are not huge, they will still have a huge impact on its price.
Furthermore, the approval of an ETF and the rise in the price of ETH could fuel a big rally in altcoins. Solana, Avalanche and many Layer 2 altcoins will see a huge rally in the coming days.
Also check out: Ethereum Rises Over 20% as Spot ETF Approval Rounds Approach Market: Is a New ATH on the Way?