Following the landmark approval of multiple spot Bitcoin exchange-traded funds (ETFs) on January 10, this has been the abounding theme in the cryptocurrency market. The lead crypto analyst at FXStreet attributed the narrative to the surge in Bitcoin price, which now stands about 50% higher since the investment product started trading.
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Acknowledging the ongoing frenzy in the cryptocurrency market, CNBC’s host of Mad Money, Jim Cramer, says an ETH ETF could come soon following the success of the Bitcoin ETFs.
While the assumption comes shortly after his rhetoric, “What has Bitcoin ever done for Bitcoin,” the main inspiration for Cramer’s remarks is the impressive numbers that BTC ETFs continue to record.
As detailed by ETF specialist Eric Balchunas, trading volumes have hit a new record with nine Bitcoin ETFs already breaking their all-time daily volume record of $2.6 billion. This is no mean feat, considering the numbers came only halfway through the trading day.
On a scale of one to three, Balchunas puts the current craze in the ETF market at a two, highlighting that “ARK was the last full blown ETF mania” in his opinion, meaning a three. Nevertheless, the ETF expert acknowledges that the numbers are absurd and very rare.
Overflows from the spot ETF are spilling into futures ETFs like BITX, BITO and BITI, as well as stocks like MicroStrategy (MSTR), according to Balchunas.
James Seyffart, another ETF specialist with Bloomberg weigned in, “The Bitcoin ETFs are absolutely demolishing their prior trading volume record from day 1. We're at $6.28 billion and there's still 90 minutes left of trading.”
In January, Hester Pierce, one of the commissioners at the US Securities & Exchange Commission (SEC), said that she hopes for a better approach toward possible spot ETH ETF. This was after an extensive back and forth between the regulatory body and the ETF issuers.
Specifically, Peirce hopes for “regular way considerations” to spot ETF products much like has been applied to other related products, without the need for court orders to deem the agency’s approach “arbitrary and capricious.” She had also articulated that spot BTC ETFs had met the requirements for approval much earlier and appreciated that people now have a cheaper and more efficient way of gaining access to BTC.
Cramer joins the likes of Valkyrie Fund CIO Steven McClurg, who said an ETH ETF launch would be unsurprising. Ekta Mourya, a reporter at FXStreet, highlighted last week that the Ethereum ETF race has intensified.. The report came after VanEck submitted a revised S-1A filing and ARK/21Shares filed a new 19b-4 for their Spot Ethereum ETFs.
The expected date for approval is May 2024 with a Bloomberg report from January 30 indicating that Standard Chartered is positive that the SEC will allow ETFs to hold Ether around that month (May). According to Standard Chartered, the asset managers will be the first to come up against the final deadline. Experts say to expect Ethereum price to hit a peak of $4,000 by the expected approval date.
Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.