Ether rallies on speculation over spot-ETF launch

In the two weeks leading up to the approval and afterwards, the value of ether increased by more than 28%, hitting $3,748 at one time

Ether, the native crypto currency of the Ethereum blockchain, rallied in the past fortnight, outperforming bitcoin. This comes as the US SEC approves eight spot ether ETFs.

On 23 May, the Securities and Exchange Commission approved spot ether ETF applications from fund managers including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy and Franklin Templeton.

In the two weeks leading up to the approval and afterwards, the value of ether increased by more than 28%, touching $3,748 at one time. In the same period, other major crypto tokens, bitcoin and solana rose by 4.2% and 6.25% respectively, as per Coingecko data.

The anticipation surrounding the impact of these exchange-traded funds led to a surge in investor interest. Derivatives market indicators show that many traders expect ether to rise in value once these exchange-traded funds begin trading on major exchanges in the US, such as the Chicago Board Options Exchange, Nasdaq and the New York Stock Exchange in the coming weeks or months.

Trading of ether ETFs on exchanges depends on the completion of specific filing documents, called S-1 registration statements, even though their 19b-4 filings have already been approved by the Securities and Exchange Commission. This process could take anywhere from a few days to several months.

Like the spot bitcoin ETFs approved in January, traders anticipate that these financial products will open the gateway for mainstream capital to flood the crypto market. The indications for spot bitcoin exchange-traded funds have been favourable so far, with fund managers like BlackRock, allocating inflows of almost $20 billion since their launch in January. If this pattern is mirrored with spot ether exchange-traded funds and the supply dynamics for the token remain largely unchanged, it could lead to a price rise for the digital asset.

The SEC’s approval of spot ether ETFs also generated more trading volume across the crypto currency market. Unlike the rapid launch of bitcoin ETFs, however, which began trading shortly after approval, the ether ETFs might take weeks or months to go live, but this delay seems to have fuelled speculation and trading activity.