Things used to be easier for crypto investors than they are today. For example, in the last quarter of the previous year, or in the first quarter of 2024, when the prices of most coins rose week after week, and as an investor you couldn’t go wrong. The reason for the rally at the time was the approval of spot bitcoin ETFs in the US. There was earlier speculation as to why the price of Bitcoin had already risen, but when the funds were actually tradable, billions immediately poured into the market, causing the price to rise further. Ethereum ETFs are now before approval and the effect could be similar.
Why are prices rising after the launch of crypto ETFs?
Bitcoin and Ethereum ETFs are a big deal in the US. The United States of America is considered an extremely important market for cryptocurrencies and is usually a big price driver as it plays a central role in the global economy. Through exchange-traded funds, cryptocurrencies are finally making their way to Wall Street, and institutional investors can also invest in digital gold on a large scale when they buy shares of funds that ETF issuers must buy bitcoin (or ether) for in return. ensure value. Institutional investors have also been quick to invest after Bitcoin ETFs were approved, although experts say they typically need 12 months for their due diligence. It can therefore be assumed that even larger amounts will flow in the future.
Bitcoin’s strength has spread throughout the market, as it usually does when the reserve digital currency rises, allowing Ethereum to benefit from Bitcoin ETFs as well. Ethereum ETFs are now set to launch in the US from July 2, which could allow ETH to outperform Bitcoin for a while.
Ethereum: Similar price development as expected for Bitcoin
While there is no pre-emptive euphoria this time around, it is expected that a Bitcoin-like rally could follow the launch of the Ethereum ETF as billions are also expected to flow into ETH. It is estimated that around a third of the capital flowing into Bitcoin through ETFs will flow into Ethereum. Given that ETH’s market cap is roughly one-third that of Bitcoin, this would be enough to have a similarly strong effect on price.
The price of Bitcoin rose by approximately 57% in the two months following the ETF’s launch. Ethereum (ETH) is currently trading around $3,500. A 57% increase would catapult the price to around $5,500. Of course, it will not behave 1:1 like with Bitcoin, but the assumption that a similar course will occur is certainly justified
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