The next “big thing” regarding the intersection of ETFs and cryptocurrency could be the SEC approving spot ether ETFs.
Prices of ether, the second-largest cryptocurrency, surged in recent day. That’s due to reports that the SEC is asking fund issuers that filed for spot ether ETFs to make adjustments to those proposals. That could be a sign the agency is preparing to green-light these ETFs just months after allowing spot bitcoin ETFs to come to market.
“The SEC must decide whether to approve applications filed by CBOE to list ether ETFs provided by VanEck and ARK Investments/21Shares by the end of this week. The SEC had not engaged with exchanges and issuers on the filing details, leading industry executives to expect it would reject them,” reported Reuters.
Some experts believe spot ether ETF approval could play out similarly to what happened with bitcoin ETFs. It would be a buy-the-rumor-sell-the-news event, but it could also spark a rally in altcoins.
Ether ETFs Could Renew Altcoin Interest
Altcoins are considered all-digital currencies beyond bitcoin. That implies the universe is expansive and potentially littered with many assets investors would be better off ignoring. However, the decentralized finance (DeFi) universe is home to some potential-rich tokens. Many of those are linked to the ethereum network.
Jeff Owens, co-founder of Layer 1 blockchain Haven1, sees benefit for select altcoins should spot ether ETFs be approved. But he cautioned that some of those digital currencies could experience near-term volatility.
“We’ve already seen the impact on ETH, and on the price of most altcoins, especially L2s like Arbitrum and Optimism, and DeFi stalwarts like Uniswap and Aave. Competitor chains like Solana have moved less, but a surge in optimism from a positive verdict could uplift the broader crypto market,” according to Owens.
Solana is the fifth-largest digital currency by market capitalization. It has a market value north of $80 billion as of late Tuesday. Uniswap and Aave are the 21st- and 66th-largest cryptocurrencies, respectively.
Owens added that the spot ether ETF approval isn’t guaranteed. He additionally said crypto investors make decisions rooted in fundamentals and logic while eschewing impulse-based calls.
“Let’s not forget that the approval is still not guaranteed,” he concluded. ”The markets are reacting strongly to speculation. If the market’s expectation is wrong, we could see a significant price correction. Even if the SEC does approve these funds, traders may initially ‘sell the news’, leading to short-term volatility. Any investment strategy should consider these factors and avoid making trading decisions based on emotion alone.”
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