Cryptocurrency traders are closely monitoring the surge in the price of Ethereum (ETH) as expectations grow over the possible approval of exchange-traded funds (ETFs) in the United States. Bets for further gains from Ether are expanding despite ongoing doubts about the level of demand for these investment vehicles.
The U.S. Securities and Exchange Commission’s (SEC) recent change in stance has caused the price of Ethereum to surge 26% over the past seven days, marking the biggest weekly gain since the 2021 cryptocurrency bull market, according to Bloomberg data.
Investors are drawing parallels with the surprising debut of the U.S. spot Bitcoin ETF last January, which quickly amassed $59 billion in assets. However, because Ethereum is less mainstream than Bitcoin, it is difficult to gauge investor interest.
One key difference is that spot ETFs do not engage in staking, a critical process for earning rewards by pledging tokens to support the Ethereum blockchain. This omission raises concerns about the attractiveness of these funds compared to direct token ownership.
BlackRock Inc. Major players such as and Fidelity Investments are awaiting SEC approval to launch Ether-related products, but the timeline for these developments remains uncertain. As of Monday morning in London, Ethereum was trading around $3,900, while Bitcoin was hovering around $68,500.
Chris Weston, head of research at Pepperstone Group, remains bullish on Ethereum, highlighting that pullbacks provide buying opportunities.
Options markets indicate growing optimism, with bullish bets targeting Ether concentrated above $5,000, as observed on the Deribit trading platform. The current spot Ethereum record is $4,866, set in November 2021.
Ether’s volatility is expected to intensify further, with the gap between the T3 Ether Volatility Index and Bitcoin widening significantly after early 2023. This means that speculators expect greater price fluctuations for Ether compared to Bitcoin.
Analysts are also closely examining demand for Ethereum futures offered by Chicago-based CME Group Inc. as an indicator of institutional interest in U.S. regulated cryptocurrency exposure. Open interest on CME Ethereum futures is increasing, but remains low compared to CME Bitcoin futures, indicating relatively low institutional participation in Ethereum.
Noelle Acheson, author of the Crypto Is Macro Now newsletter, warns that initial inflows into these products may be disappointing due to the minimal participation from institutions expected to flock to Ether ETFs after launch.
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