Approval of a Bitcoin Spot ETF: What impact on the Ethereum ecosystem?

The date of January 10, 2024, is now enshrined in the annals of crypto with golden letters. Indeed, the anticipation of this deadline by the crypto and financial community for months was not in vain, as it marked the approval of a Bitcoin Spot ETF. The decision by the Securities and Exchange Commission (SEC) was eagerly awaited on this date. And it is favorable. now, a positive impact is expected on Bitcoin (BTC). But this outlook could impact the entire crypto industry, including Ethereum. In this context, effects on the Ether (ETH) market, Ethereum’s native crypto, are also envisaged. That said, how would ETH react to this new development? Let’s look at this together in this article.

The Bitcoin ETF as a Reference for the Establishment of Ethereum ETFs

The SEC has finally approved the much-anticipated Bitcoin Spot ETF. A development that could have significant consequences on the Ethereum ecosystem. The approval of a Bitcoin Spot ETF could serve as a regulatory framework for the emergence of an Ethereum Spot ETF. As a reminder, the American securities watchdog has received several Spot ETF requests on Ethereum in recent months. Specifically, those from Hashdex Nasdaq, Grayscale, VanEck, ARK Invest by Cathie Wood, and 21Shares especially.

In December 2023, the financial regulator postponed its decision regarding these various Ethereum Spot ETF applications to May 2024. On analysis, it seems that this deadline is related to the SEC’s efforts to classify certain cryptos based on proof-of-stake (PoS) as securities.

Interestingly, Ether (ETH), Ethereum’s native crypto, has not been integrated into this category as part of the regulator’s crackdown on other crypto platforms. Moreover, the SEC did not contest the classification of Ethereum during the process of recording its ETF with the Commodity Futures Trading Commission (CFTC).

Thus, analysts believe that with the Bitcoin Spot ETF now approved, the regulatory landscape surrounding Ethereum and other digital assets would be particularly simplified. This could be reflected in the valuation of the asset, which is currently trading at around $2,586, up 5.70% in the last 24 hours.

Consequences Linked to the Correlation between Bitcoin and Ethereum

It should be noted that Ethereum and Bitcoin platforms are the most significant in the crypto industry. As such, they maintain a notable correlation that could have significant implications for future ETH price movements. Analysts estimate that the confirmed approval of a Bitcoin Spot ETF by regulatory authorities places ETH in pole position for a rally.

This anticipation is precisely based on the historical correlation between Bitcoin prices and ETH. A trend that has also been maintained throughout these last years. But the viability of this projection is dependent on a vital factor. Indeed, this new approval must not trigger a negative selling reaction. Certainly, the ETH market could experience an upward valuation. This is provided that demand increases in anticipation of broader adoption.

In any case, the Bitcoin Spot ETF should now serve as a crucial test. In particular, to measure the maturation of the crypto market and its integration into traditional financial spheres.

It should be noted that this development has rendered all pessimistic speculations concerning a delay or outright refusal of the Bitcoin Spot ETF approval obsolete. A prospect that some analysts suspected could potentially exert downward pressure on the ETH market in the short term. This could imply a correction period during which market participants would adjust their expectations.

The crypto platform Bitwise had even conducted investigations involving American financial advisors. Stakeholders in the finance sector whose skepticism, particularly that of 39% among them, she highlighted. In the end, there was more fear than harm. A reminder of the importance of taking even the most evident crypto speculations with a lot of caution and reserve.

What are the Impacts for ETH Metrics?

As the historic decision regarding the Bitcoin Spot ETF has been made, changes are being observed in the price movements of Ether (ETH). The rate of Ethereum’s native crypto seems to be following an uptrend, but with a structure that is progressively tightening.

From a purely technical point of view, ETH aligns with the Fibonacci line at 0.236. This means that the price of ETH has retraced about 23.6% of the previous bullish move up to this level. Traders and technical analysts often monitor this Fibonacci level, as they can act as areas of trend reversal or consolidation.

Analysts think that the officialization of the Bitcoin Spot ETF could change market dynamics by creating a new price pattern. Traders might anticipate a new market phase marked by a potential price increase. This scenario presents optimistic prospects, anticipating an improvement target of about $3,870 by March. This level would represent an increase of approximately 75% compared to the current price and would coincide with the Fibonacci line of 0.786.

More broadly, some crypto-enthusiasts think that the approval of the Bitcoin Spot ETF will support the emergence of an Ethereum Spot ETF. This, with this perspective monopolizing the attention of investors and stimulating the soaring valuation of the asset which has increased by nearly 50% over the last 90 days.

Conclusion 

Yesterday’s historic approval, on 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 think that this approval would serve as a benchmark for the establishment of an Ethereum Spot ETF. This would simplify the regulatory landscape around Ethereum. This perspective, combined with the historical correlation between BTC and ETH prices, raises optimistic expectations for an Ether rally. However, caution is advised. A negative selling reaction could exert downward pressure on ETH in the short term.