Mitrade Insights is dedicated to providing investors with rich, timely and most valuable financial information to help investors grasp the market situation and find timely trading opportunities.

2021

Best News & Analysis Provider

FxDailyInfo

2022

Best Forex Educational Resources Global

International Business Magazine

Insights

News

Cryptocurrencies

Bitcoin ETFs Signal Historic Win, But Ethereum Likely to Steal BTC's Spotlight

Source Fxstreet

Bitcoin ETF approval failed to catalyze gains in BTC, instead Ethereum price rallied and traders turned their capital to the altcoin.
SEC’s greenlight to Bitcoin ETFs likely fueled anticipation of Ethereum ETF approval, among market participants.
Ethereum ETF’s final deadline is in May, this could catalyze gains in Ether.

Bitcoin ETF approval marks a key milestone in the crypto ecosystem as the largest cryptocurrency by market capitalization gains acceptance. However, instead of catalyzing gains in Bitcoin, the ETF fueled a rally in Ethereum.

Market participants are in anticipation of an Ethereum Spot ETF approval, this is likely one of the catalysts driving gains in Ether.

Also read: Bitcoin Spot ETF race sees Grayscale capture major share of trades on day 1, BTC price hits two-year peak

Bitcoin ETF approval ushers Ethereum gains

Bitcoin ETFs received Securities and Exchange Commission’s (SEC) greenlight. The watershed moment failed to catalyze BTC gains, instead, to market participants’ surprise, Ethereum price rallied, flipping the 2023 peak (close to $2,400) to support.

Ethereum price climbed to a peak of $2,600, on the first trading day for Bitcoin Spot ETFs. It is likely that capital is rotating from Bitcoin to Ethereum and altcoins, given there is a likelihood of Ethereum Spot ETF approval in May 2024.

ETH

ETH/USDT 1-day chart

In the weeks and months leading up to Bitcoin ETF approval, derivatives traders anticipated higher Implied volatility in Ethereum in 2024, according to Greeks Live data. The metric represents traders’ expectations of price change. Implied volatility directly influences price of put and call options in the derivatives market. Traders are looking at Ether as the next asset that could receive the SEC’s nod for its Spot ETF.

ETH

Open Interest in Ether. Source: Greeks.Live

Why Bitcoin ETFs failed to catalyze a massive rally in BTC

The optimism surrounding Bitcoin ETFs peaked in October 2023. Based on Greeks Live data, the annualized 7-day Implied volatility hit 96% ahead of the SEC’s false announcement on January 10.

Since the ETFs received the SEC’s seal of approval, it has collapsed to 52%. Its important to note that derivatives traders are aware that there is a likelihood of a “sell the news” effect of an event, and this could usher in a decline in options prices as well. Therefore, typically Implied volatility peaks ahead of the key event and tends to decline in the days/ weeks after.

Holding a long position in an asset on a day of a key announcement from a regulator could expose traders to relatively high risk. This is likely to repeat closer to Ethereum ETF approval.

How Ethereum ecosystem stands to benefit from ETH’s rally

With Ethereum stealing the SEC’s spotlight, the Total Volume of assets Locked (TVL) in ETH’s ecosystem is on the rise. Crypto expert behind the Twitter handle @Axel_bitblaze69 believes that higher TVL translates to higher revenue and this creates a positive feedback loop for all projects in the Ethereum ecosystem.

ETH

TVL of Ethereum. Source: DefiLlama

The expert notes that the ETHBTC ratio is at what is termed a “pico bottom,” the beginning of an Ethereum season. The gains in the Ethereum Layer 2 ecosystem and ETH tie back to the approval of Bitcoin ETFs, as Ether traders speculate ahead of the final deadline, in May 2024.

Vitalik Buterin’s comments in the 11th Ethereum Foundation Research Reddit AMA are likely another factor that fueled ETH price gains post BTC ETF approval. In the AMA, Buterin noted that Ether’s gas limit has not been increased for nearly three years and this the longest time in the protocol’s history. In the days leading up to the ETF’s approval, Buterin tweeted about “portfolio diversification” and its benefits.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

Recommended Articles

October hike odds climb toward 60% as Goldman and BofA both flip — what Warsh's "dose of accommodation" really changed Rate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.

Author Irene Q.

Sep 23, Wed

Rate futures now price roughly 55% to 62% for a 25bp hike at the October 27-28 FOMC, up from about 30% before Chair Warsh's post-meeting framing that the Fed is merely "removing some accommodation." Goldman Sachs has added an October hike to its forecast and Bank of America now sees moves in both October and December. Here is the repricing, the language behind it, and the two data points that decide it.

Four jobs reports in five days: what JOLTS, ADP, claims and the September payrolls mean for the October Fed decision The US labour market faces its densest data week of the month. JOLTS job openings land Tuesday (7.2 million expected), ADP on Wednesday (70,000 expected), initial claims on Thursday and the September non-farm payrolls on Friday (100,000 expected, down from 162,000). Markets price a 64%-70% chance of another quarter-point Fed hike on October 28. The dollar index sits at 100.77 and the S&P 500 at 7,729.8.

Author Mitrade

Sep 28, Mon

The US labour market faces its densest data week of the month. JOLTS job openings land Tuesday (7.2 million expected), ADP on Wednesday (70,000 expected), initial claims on Thursday and the September non-farm payrolls on Friday (100,000 expected, down from 162,000). Markets price a 64%-70% chance of another quarter-point Fed hike on October 28. The dollar index sits at 100.77 and the S&P 500 at 7,729.8.

Nvidia's $150 billion buyback landed — and the AI sector fell anyway. That's the signal worth trading Nvidia closed up 1.68% at $228.86 on 28 September after announcing a $150 billion share repurchase authorisation, the largest single corporate buyback on record, while the rest of the AI complex sold off: AMD -3.6%, Micron -2.6%, Meta -4.8% and the Philadelphia Semiconductor Index -1.61%. The divergence is not noise. Capital is rotating toward cash-flow certainty, not abandoning the AI theme. With Micron reporting after the close on 30 September, here is what the split means.

Author Irene Q.

Sep 29, Tue

Nvidia closed up 1.68% at $228.86 on 28 September after announcing a $150 billion share repurchase authorisation, the largest single corporate buyback on record, while the rest of the AI complex sold off: AMD -3.6%, Micron -2.6%, Meta -4.8% and the Philadelphia Semiconductor Index -1.61%. The divergence is not noise. Capital is rotating toward cash-flow certainty, not abandoning the AI theme. With Micron reporting after the close on 30 September, here is what the split means.

【Daily Brief】The dollar ground higher for six days — and the AUD fell 2% in the very week the RBA hiked to a 15-year high The dollar index held above 101 while the Australian dollar slid to a two-month low of 0.6976, a 2.02% six-session loss, even though the RBA raised rates to 4.60% and Australian CPI printed 4.0%. The yen is the only major currency gaining, ahead of Japan's monthly intervention tally at 7pm JST.

Author Irene Q.

20 hours ago

The dollar index held above 101 while the Australian dollar slid to a two-month low of 0.6976, a 2.02% six-session loss, even though the RBA raised rates to 4.60% and Australian CPI printed 4.0%. The yen is the only major currency gaining, ahead of Japan's monthly intervention tally at 7pm JST.

【Daily Brief】30-year Treasury tops 5.59%, S&P 500 slips to 7,670 and gold holds $4,180 — PCE lands tonight The 30-year Treasury yield closed at 5.59%, its highest since June 2002, and the Dow fell 131.59 points to 51,349.92. US consumer confidence dropped to 81.9, a 12-year low, and JOLTS job openings fell to 7.1 million. August PCE and Q3 GDP both land at 8:30am ET tonight.

Author Suzie

19 hours ago

The 30-year Treasury yield closed at 5.59%, its highest since June 2002, and the Dow fell 131.59 points to 51,349.92. US consumer confidence dropped to 81.9, a 12-year low, and JOLTS job openings fell to 7.1 million. August PCE and Q3 GDP both land at 8:30am ET tonight.

Related Instrument