The long-awaited approval of spot Ether exchange-traded funds (ETFs) in the United States didn’t trigger the immediate price surge some expected. Here’s why:
Pre-Approval Buying and Launch Delays:
- Crypto commentators like Zach Rynes suggest that investors who anticipated the approval may have already bought Ether (ETH) beforehand, dampening the post-approval price movement.
- Ether had already seen a significant 29% rise in the week leading up to the news, fueled by speculation of a potential SEC shift on ETF approvals.
Wait for the Launch: S-1 Filing Hurdle:
- While approved by the SEC, these ETFs haven’t been greenlit for trading yet. They require an additional step – an S-1 filing approval by the SEC.
- This comprehensive document details the financial health and risk profile of the issuing company, along with the specific securities it intends to offer.
- As of now, VanEck recently submitted its revised S-1 filing, and analysts predict it could take weeks or even months for approval.
Future Inflows and Potential Price Driver:
- Many analysts, including Rynes and crypto research firm Second Mountain, believe the real price impact will come from investor inflows once the ETFs begin trading.
- Second Mountain predicted a “massive capital inflow” in the billions during the first week of launch.
Tempering Expectations: Past Performance as a Guide:
- Some experts caution against assuming an immediate upward trend. Bitcoin’s price, for example, dropped 15% after the launch of spot Bitcoin ETFs in January 2024. It took a month for the price to recover and climb 30%.
Grayscale Conversion and Potential Outflows:
- Grayscale’s plan to convert its existing Grayscale Ethereum Trust (ETHE) into a spot ETF raises concerns about potential outflows, similar to what happened with the Grayscale Bitcoin Trust (GBTC) after Bitcoin ETFs launched.
- Some crypto traders worry that a significant portion of the $11 billion+ ETH locked in ETHE for years could be withdrawn when the spot ETF becomes available.
Undervalued Ethereum? Long-Term Optimism:
- Some Ethereum proponents like independent educator Sassal argue that Ether is undervalued, and the market has only had a few days to fully digest the ETF approval news. Bitcoin, meanwhile, saw a minor dip after the announcement but has since recovered.
Read Also: Bitcoin Miner Marathon Digital Invests in Kenya's Renewable Energy Sector
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
Comments are closed.