The U.S. Securities and Exchange Commission’s (SEC) approval of a spot Ethereum exchange-traded fund (ETF) could be the “most powerful statement” for crypto assets, according to an analysis by Kaiko Research. The Kaico Research team believes that Ethereum’s rally in ETF approvals after Bitcoin shows that investors are betting on regulators approving Ether-based ETFs.
ETH outperforms ETH beta tokens.
The potential approval of a spot-backed Ethereum (ETH) exchange-traded fund (ETF) is likely to be the “strongest story” for crypto assets to date, according to an analysis conducted by Kaiko Research. To support this claim, the analysis points to Bitcoin’s performance before the SEC approved a spot Bitcoin ETF.
Bitcoin’s 100% return in the 365 days prior to ETF approval easily outpaced ETH’s 60% return, according to Kaiko data. In fact, in the weeks and days leading up to approval, BTC surged past $48,000, with some predicting that the cryptocurrency asset’s USD value would surpass $50,000 following the spot ETF’s approval.
However, after the SEC approved 11 spot Bitcoin ETFs, BTC price declined while ETH price rebounded. The Kaiko team hinted that this could indicate that investors are “building on the hype that ETH could be next.” Another indicator highlighted in the Kaiko Research analysis is related to investors’ preference for tokens that are related to ETH but with higher volatility, also known as ETH beta.
According to the analysis, while interest in ETH declined following beta approval, interest in ETH “performed well with the least decline.” During the second week of January, ETH spot volumes on centralized exchanges reached their highest levels since the FTX collapse. In fact, that week, ETH recorded its third highest spot trading volume since early 2023.
Meanwhile, Kaiko’s derivatives data shows that ETH’s recent performance has been primarily fueled by spot trading volume rather than perpetual futures. The report added:
September and October were record lows for futures markets, with total open interest (USD) down more than 20% from summer levels. At this time, there was little price change and the funding rate was neutral.
In conclusion, the Kaiko team said that the ETF story is more likely to reignite interest in Ether, but even if this one fails, there could be other stories like the success and re-staking of a new Layer 2 (L2) or Eigenn Layer. A catalyst for the next rally in cryptocurrency assets.
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Source: Bitcoin.com