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Bitcoin hovered around the flat line higher late Wednesday after the Securities and Exchange Commission gave the green light for the first-ever spot bitcoin ETFs to trade in the U.S., as expected.
The cryptocurrency trimmed earlier losses and was last trading flat at $46,671.22, according to Coin Metrics. Meanwhile, the price of ether soared as high as 15.5% to $2,606.00, its highest level since May 2022. It was last up 14.5% at $2,586.54.
Bitcoin erases earlier losses after SEC greenlights bitcoin ETFs
The ETF approval is a watershed moment for the crypto industry, which first sought to launch a bitcoin ETF more than 10 years ago. Optimism had been building since Grayscale’s big legal win against the SEC in August over the regulator’s refusal to let it convert its popular Bitcoin Trust (GBTC) into an ETF. The flagship cryptocurrency’s price has increased 80% since then.
Following the SEC’s decision, bitcoin initially edged lower, as expected by many traders. Although the volume of inflows into the new funds, once they begin trading, remains to be seen, bitcoin ETFs are still widely expected to drive the demand – and ultimately, price – of bitcoin higher.
“Trading volumes across almost every exchange have been rising in the last 24 hours, and it wouldn’t be much of a surprise to see them continue to explode throughout the rest of the week,” said Chris Martin, head of research at Amberdata.
While bitcoin was on pause, mining stocks, which benefit from increases in the bitcoin price and tend to reflect longer-term investor sentiment toward bitcoin, got a big boost. Wall Street favorites Iris Energy and CleanSpark surged 6% and 7%, respectively, in after-hours trading. Marathon Digital gained 6% and Riot Platforms added 5%.
Meanwhile, ether’s rally propped up other coins in the Ethereum ecosystem. The token tied to Polygon gained 13%, Chainlink advanced 11% and Uniswap soared 14%.
“Now that the bitcoin ETF speculation has come to fruition it looks like traders are rotating to ether to get ahead of the next narrative, an ETH ETF, while ETH looks relatively cheap compared to most other tokens,” said Conor Ryder, head of research at the stablecoin company Ethena Labs.
The SEC is due to give decisions on spot ETH ETF applications beginning in May. BlackRock, Invesco, Ark and VanEck are among the firms in line for approval, as well as Grayscale, which is seeking to convert its existing Ethereum Trust (ETHE) into an ETF.
“It’s all about getting ahead of the narratives — bitcoin has rallied versus ether for the last six months thanks to spot ETF speculation, and ETF approval ties a bow on that narrative,” Ryder said. “Meanwhile ETH has struggled to find any momentum and has underperformed compared to most of the smaller Layer 1s,” or blockchain networks, like Solana and Cardano.
Ether lagged bitcoin in 2023, rising just 90% compared to bitcoin’s 157%.