ETFs' Impact on Ethereum and Bitcoin Amidst Back-to-Back Surges

Rumors of Ethereum ETF approval have fueled a sustained surge in the digital currency market this week. Following Monday's largest increase in 18 months, Ethereum continued to lead on Tuesday, with a maximum intraday gain of 8.6%.

Overnight, Bitcoin once surged to near $72,000, then gave up gains and closed nearly flat. However, it is noteworthy that this is the sixth consecutive day of net inflows into Bitcoin ETFs.

Media reports, citing multiple informed sources, indicate that the U.S. SEC has requested adjustments to Ethereum ETF listing applications from NASDAQ, the Chicago Options Exchange, and the New York Stock Exchange on Monday, suggesting that the SEC may be preparing to approve these applications.

The latest development is that SEC officials have asked the aforementioned exchanges to submit applications by Tuesday at the latest. The SEC must decide this week whether to approve Ethereum ETFs issued by VanEck and ARK Investments/21Shares.

Although the Ethereum ETF is still in the first step of the application process, it may already signify a significant and unexpected victory for the cryptocurrency industry, far exceeding initial expectations.

However, the future direction of the cryptocurrency industry remains uncertain.

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Key "turning point" before price surge OR the industry begins to "involution"?

Firstly, industry insiders suggest that the launch of Ethereum ETFs could lead to a sharp increase in market demand, resulting in a supply crunch for Ether.

Ethereum co-founder and founder of crypto infrastructure company ConsenSys, Joe Lubin, stated that institutions that have already gained exposure to Bitcoin through the newly launched Bitcoin ETFs, "are very likely to want to diversify their investments into the second approved cryptocurrency ETF."

He also believes that "purchasing Ether through ETFs will put considerable pressure on the market," and compared to the approval of Bitcoin ETFs in January this year, the current market supply may be even harder to meet the strong market demand.That is to say, under conditions of supply tension, the price of Ether may become more sensitive to capital inflows, and the locked Ether cannot be used to meet the additional demand for ETFs, further exacerbating supply tension.

More importantly, as transaction activities on Ethereum become more active, certain mechanisms will consume a large amount of existing Ether, adding insult to injury for the already tight supply, thereby driving up the price of Ether.

In addition, the acceptance of cryptocurrencies by mainstream financial institutions is also significantly increasing, with hopes of investing in cryptocurrencies through ETFs. Under these circumstances, the supply squeeze of Ethereum ETFs may become even more severe.

Lubin stated that for Ether and the entire cryptocurrency industry, "this could be a pivotal turning point."

However, some analytical views believe that the introduction of Ethereum ETFs will initially lead the industry to "involution."

Economist and gold enthusiast Peter Schiff warned that the launch of Ethereum ETFs may have a negative impact on spot Bitcoin ETFs and Bitcoin itself, with market funds shifting from Bitcoin ETFs to Ethereum ETFs.