Part of the Bitcoin success story of 2024 has had to do with the approval of spot Bitcoin ETFs. ETFs provided an easy access to Bitcoin investing and trading for folks not interested in crypto wallets or the risks of having one’s crypto exchange hacked. Now the other big deal in crypto, the Ether token, is in line for SEC approval for spot ETFs. This makes us wonder. Will ETFs drive Ether higher? Or will the dynamic be different than with Bitcoin because of how Ethereum is a different approach to crypto than Bitcoin is?
Pending Approval of Ether ETFs
According to SEC head Gensler, Ether ETF approval could come as soon as this summer. The process for Ether is going faster than it did with Bitcoin. This is likely because Bitcoin led the way by dealing with a whole host of issues that the SEC was concerned about. What apparently remain are individual issues with individual issuers of spot ETFs for Ether. The same folks as with Bitcoin are applying to provide spot ETFs for Ether. These include Blackrock Inc., Fidelity Investments, VanEck Associates, and ARK Investment Management.
What Difference Will Ether Spot Price ETFs Make?
There already are ETFs that let you buy and sell futures on Ether. While futures track spot prices and are a viable way to trade this cryptocurrency, they are not a means of investing in Ether. Also there are a host of issues related to trading futures that many mom and pop investors are simply not interested in dealing with. This one may expect to see folks who are interested in Ether but not in futures and not in direct crypto investing come to the table. There was a near doubling of Bitcoin’s price in the run up to approval. However, there was also the recovery from crypto winter and expectation of the Federal Reserve cutting interest rates. In the last twelve months both Ether and Bitcoin have roughly doubled their prices. As such, we are wondering if there is any more room for Ether’s price to run one spot price ETFs are approved.
How Does Ether Differ From Bitcoin?
Bitcoin was designed to carry out basic financial payments. One can think of the Ethereum system as Bitcoin 2.0 in that it takes the idea of crypto a step farther and has developed a whole financial system. One can work in the world of decentralized finance with Ether and Ethereum’s smart contracts. Our opinion for quite some time has been that over time Ethereum and the Ether token will surpass Bitcoin in overall value. To a large degree Bitcoin has been a digital form of gold, a digital commodity that has an eventual absolute limit and this can be seen as a hedge against inflation. The tricky part here is that the whole hedge against inflation and refuge in times of financial distress did not pan out when the Fed jacked up interest rates and Bitcoin fell by 80% to its crypto winter depths. It should be noted that Ether had a similar fall and recovery. How the market sees Bitcoin versus Ether is similar in terms of spot price. Nevertheless, over time one can still expect there to be more uses for Ether as a vehicle for decentralized financial business than there will ever be for Bitcoin. That, we expect, will make the difference between the two and lead to Ether passing Bitcoin in importance and value. Frankly, it is probably too early to say how spot ETFs for Ether will fit into that picture.