There are a few main things people look at whenever a new crypto regulation, product, and so on, hits the market. Usually, most of these curiosities boil down to how the Bitcoin and Ethereum price USD are to be impacted by the news and changes, for they are the engine of the whole cryptocurrency industry and considerably impact the traditional financial landscape. This time, the media’s focus is on how the latest crypto additions, spot exchange-traded funds (ETFs), influence each other.
We saw that the debut of Bitcoin spot ETFs didn’t affect Ethereum much, mostly focusing on Bitcoin, which saw massive price increases months after the news of the ETF approval broke out. Bitcoin established a new all-time high of over $100K after the elections in the U.S., especially as Trumwas elected and now traders expect a more crypto-friendly regulatory environment. Now, crypto-enamored audiences look forward to improvements in the Bitcoin and Ethereum prices, which should trigger the values in ETFs, too.
Crypto audiences are abuzz with excitement over the possible price gains that Ethereum could register over the following months, especially since institutional investors and everyday crypto buyers are pouring into the assets. Some voices whisper that Ethereum could overshine Bitcoin, while others forecast simultaneous and similar performance improvement.
Spot exchange-traded funds overviews
Despite being here for a while, it’s safe to say that the complexity and depth of the investment vehicles can make it difficult to summarize their core attributes. A BTC ETF represents an exchange-traded fund made of different assets that all track the price of Bitcoin, and the same is the situation for ETH ETFs. These aren’t traded on crypto exchange platforms like you may have been used to if you invested in crypto until their launch, but on traditional exchanges like the NYSE and Nasdaq. They’re created by Bitwise, BlackRock, Grayscale, Invesco, Fidelity, and other asset management companies that offer both Bitcoin- and Ethereum-based funds.
Ethereum ETFs started being offered and tradeable by investors on 23 July of this year, with base fees covering the 0.15%-0.25% spectrum. The fees are structured this way, with some investors initially ignoring them to make ETFs more attractive to investors. Experts expect these ETFs to push the underlying asset’s prices higher and possibly draw $15BN in fresh assets in the best-case scenario. Moreover, it’s forecasted that this approbation could entice more retailers and institutions to add Ethereum to their portfolios and possibly lay the groundwork for other ETFs tracking distinct cryptos.
A comparative breakdown of both
Numerous ETFs are available worldwide for Ethereum and Bitcoin. They are mainly classified as “futures exchange-traded funds,” primarily permitting interested parties to speculate on the assets’ future prices by investing in related agreements. This type of contract works like a settlement to purchase or sell an asset at a pre-established price and a determined future date. Contrastingly, spot ETFs provide direct exposure to the cryptocurrency tracked and enable investors to buy those assets at the specific “spot price” of that moment. They remove the need to directly manage or handle the cryptocurrency, paving the path to these assets for those who find crypto exchange platform usage unappealing. Like regular stocks, spot ETFs are traded on exchanges, which eases the way people purchase and sell when the market is open.
ETFs hold the two leading cryptos at the behest of the shareholder within a trust. ETF shares work as proof of the ETF owner’s rights over a segment of this trust. Owing to the spot ETFs’ requirement to buy BTC and ETH from the spot market, some may be misleadingly assuming they go ahead of the futures ETF market, mainly because spot ETFs actually impact the cryptocurrencies’ demand, influencing the market prices.
To illustrate this, it’s enough to look at the massive amounts of capital injected into the market from crypto traders and institutional investors from crypto exchange platforms. BTC ETFs’ successful release prompted record-breaking activity, attracting tens of billions of dollars in six months. Industry supporters consider the two ETF approvals as the springboard pushing more mainstream adoption among daily investors and a price increase promoter.
Drawing parallels
Comparing the attainments of the ETFs ruled by both cryptos, we can admit that a similarly good performance of Ethereum isn’t excluded. BTC ETFs caused significant inflows to be injected into Bitcoin, pushing its price to new peaks. As per most experts’ opinions, Ethereum should witness a similar, although slimmer, effect.
James Seyffart, analyst at Bloomberg Intelligence, expects ETH ETFs to seize approximately 20%-25% of the influxes registered by BTC ETFs in their first months. On the other hand, Bitwise CIO Matt Hougan anticipates the ETH prices to reach the zenith and possibly go beyond a $5K ATH. ETFs may also drive almost $15BN in new assets in the following months, according to Hougan.
While the broader outlook is positive, ETH’s price has exhibited some volatility and a recent slight drop. Nevertheless, the long-term sentiment remains bullish, as both retail and institutional investors are expected to engage in activity in the crypto market.
More altcoins to arrive on Wall Street
If the Bitcoin ETF approval fueled hopes that a milestone would follow for Ethereum, once that well-awaited day has come, the focus shifted to the whole altcoin reservoir. Ethereum ETF approval and launch demonstrate that the likelihood of every other crypto going to Wall Street sooner or later is pretty high, and crypto gurus such as Anthony Pompliano back these theories.
In summary
The emergence of spot BTC ETFs in January and the following spot ETH ETF approval are key achievements for the crypto industry registered this year, sparking hope for more innovations as 2025 is just around the corner. These successes are forecasted to help democratize and increase digital asset access, improve the market’s liquidity, and attract institutional investors, among others.
The regulatory validation of spot BTC and ETH ETFs not only legitimizes these cryptocurrencies but also enhances their appeal as credible investment options. As the market advances, ETFs are bound to play an essential role in its progress, with the possibility to drive constant development and maturity. Investors and stakeholders are watching closely, anticipating the impact these ETFs will have on Bitcoin, as well as on market dynamics and investor confidence.