The date January 10, 2024 is now written in golden letters in the annals of crypto. Indeed, the wait for this deadline for months by the crypto and financial community was not in vain, as it resulted in the approval of a Bitcoin spot ETF. The decision of the Securities and Exchange Commission (SEC) was eagerly awaited on this date. And she is supportive. Now, a positive impact is expected on bitcoin (BTC). But this prospect could impact the entire crypto industry, including Ethereum. In this context, effects on the market for Ether (ETH), Ethereum’s native crypto, are also envisaged. That said, how would ETH react to this new situation? Let’s see it together in this article.
The Bitcoin ETF as a benchmark for establishing Ethereum ETFs
The SEC has finally approved the highly anticipated Bitcoin Spot ETF. A development which could have serious consequences on the Ethereum ecosystem. The approval of a Bitcoin Spot ETF could serve as a framework for the emergence of an Ethereum Spot ETF. As a reminder, the American stock market watchdog has received several requests for spot ETFs on Ethereum in recent months. In this case those of Hashdex Nasdaq, Grayscale, VanEck, ARK Invest by Cathie Wood and 21Shares in particular.
In December 2023, the financial regulator postponed its decision regarding these various applications for Ethereum spot ETFs until May 2024. Upon analysis, it appears that this delay is linked to the SEC’s efforts to classify certain cryptos based on proof-of-stake (PoS) as securities.
Interestingly enough, Ether (ETH), Ethereum’s native crypto, was not included in this category as part of the regulator’s attacks on other crypto platforms. Additionally, the SEC did not challenge Ethereum’s classification during the process of registering its ETF with the Commodity Futures Trading Commission (CFTC).
Since then, analysts think that with the Bitcoin Spot ETF now approved, the regulatory landscape surrounding Ethereum and other digital assets would be particularly simplified. This could be felt on the valuation of the asset which is currently trading around $2,586, up 5.70% over the last 24 hours.
Impacts linked to the correlation between Bitcoin and Ethereum
It should be noted that the Ethereum and Bitcoin platforms are the most important in the crypto industry. As such, they have a notable correlation that could have significant implications for future ETH price movements. Analysts believe that regulators’ approval of a Bitcoin Spot ETF puts ETH in pole position for a rally.
This anticipation is based precisely on the historical correlation between the prices of bitcoin and ETH. A trend which has also continued throughout recent years. But the viability of this projection is dependent on a vital factor. Indeed, this new approval must not trigger a negative sales reaction. Certainly, the ETH market could see an upward valuation. This, however, as demand increases in anticipation of wider adoption.
Either way, the Bitcoin Spot ETF now should serve as a litmus test. In particular to measure the maturation of the crypto market and its integration into traditional financial spheres.
Note that this development has rendered obsolete all pessimistic speculation regarding a delay or outright refusal of the approval of the Bitcoin Spot ETF. A prospect that some analysts suspected of potentially putting short-term downward pressure on the ETH market. This, with the implication of a correction period during which market participants would readjust their expectations.
The crypto platform Bitwise had even carried out investigations involving American financial advisors. Players in the financial sector whose skepticism she highlighted, particularly that of 39% of them. In the end, there was more fear than harm. A reminder of the importance of taking even the most obvious crypto speculations with great caution.
What are the implications for ETH in the metrics?
As the landmark Bitcoin Spot ETF decision has been made, changes are seen in the price movements of Ether (ETH). The price of Ethereum’s native crypto appears to be on an upward trend, but with a gradually tightening structure.
From a purely technical perspective, ETH aligns with the Fibonacci line at 0.236. This means that the ETH price has retraced approximately 23.6% of the previous upward movement to this level. Traders and technical analysts often monitor this Fibonacci level because they can act as areas of trend reversal or consolidation.
Analysts believe that the formalization of the Bitcoin Spot ETF could change market dynamics by creating a new price pattern. Traders could anticipate a new market phase marked by a potential rise in prices. This scenario presents an optimistic outlook, projecting an improvement target of around $3,870 by March. This level would represent an increase of approximately 75% from the current price and would coincide with the Fibonacci line of 0.786.
More broadly, some crypto enthusiasts believe that the approval of the Bitcoin Spot ETF will support the emergence of an Ethereum Spot ETF. This, with this prospect monopolizing the attention of investors and stimulating the surge in the valuation of the asset which has increased by almost 50% over the last 90 days.
The historic approval yesterday, Wednesday January 10, of the very first Bitcoin Spot ETF by the Securities and Exchange Commission (SEC), could have significant repercussions on the Ethereum ecosystem. Analysts believe this approval would serve as a benchmark for establishing an Ethereum Spot ETF. Which would simplify the regulatory landscape around Ethereum. This prospect, combined with the historical correlation between BTC and ETH prices, is raising optimistic expectations of an Ether rally. However, you have to be careful. Because a negative selling reaction could put downward pressure on ETH in the short term.
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