The SEC approved 11 spot Bitcoin ETFs on January 10, 2024, opening the doors to new investors reluctant to take the extra steps involved in the buying process. Ethereum, the second most popular digital token, emerged as one of the biggest beneficiaries of the decision of U.S. regulators. Several firms have made applications for spot Ethereum ETFs, including Grayscale Investments, BlackRock, 21Shares, and Cathie Wood’s Ark, driving greater demand for the underlying asset. Professional and nonprofessional investors don’t want to resort to futures trading or retail full custody (possession) to have exposure to Ethereum; they prefer a traditional brokerage account.
There’s interest and enthusiasm for a spot Ethereum ETF. Leaders in the cryptoverse see value in this kind of financial product coming to market. According to Binance, there’s a 50% chance of approval by May, making Ethereum the only digital asset besides Bitcoin to get spot ETF approval in the U.S. As far as Gary Gensler is concerned, there’s no reason to approve Ethereum-based products just because spot Bitcoin ETFs have received the green light. Adherence to compliance and regulatory standards tips the balance. Institutions don’t want to launch spot Ethereum ETFs. The aim is to build more transparent and tokenized financial markets on the Ethereum blockchain.
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Spot ETFs Make It Easier for Investors to Get Exposure to Ethereum
The prospect of spot Ethereum gaining approval in the U.S. has triggered renewed interest in the cryptocurrency space. Investments in Ethereum can be complex for beginners for several reasons. Cryptocurrency exchanges tend to be difficult to use, with intricate pages and visitors having to scroll down to find what they need. Most platforms lack adequate resources for customer care as they don’t scale up their capabilities for the number of customers they serve. There’s also the issue of Ethereum wallets, which can be expensive and difficult to use. Almost all cryptocurrency wallets are vulnerable to cyberattacks.
Spot Ethereum ETFs make it possible for investors to gain exposure to the underlying asset without ownership expenses or exposure to risk. They can get their allocation into the investment they want; ETFs have lower capital gains and are only payable upon sales of the shares. Spot ETF tracks the current market price of Ethereum, for which it can be bought and sold with the expectation of immediate delivery. A spot Ethereum will be worth exactly what ETH is trading for in the cryptocurrency market. If you buy shares in a spot Ethereum ETF, you get a slice of the pie.
Ethereum Will Dominate in 2024, According to Various Experts and Analysts
Ethereum could outperform Bitcoin in 2024. Only nothing is impossible. Vitalik Buterin proposed a development roadmap to improve the network’s capacity and functionalities. Although some progress has been made, with many Layer-2 blockchains reaching their milestones, this must continue to be tackled urgently and vigorously. Ethereum is paving the way for data availability, a way for the network to see if data is available without putting too much pressure on individual nodes. Separate data availability will reduce congestion on the platform by enabling ancillary rollups to check if transactional details exist and are available for downloading.
At present, the live price of ETH is $2,942.76, with a current market cap of $ 353.60 billion and a circulating supply of 120.16 million. It’s expected that, by the end of the year, Ethereum will trade at $5,000, which would translate to a gain of 230%. The cryptocurrency reached its highest price of $4,815 in November 2021, when the coin’s price soared 153,000% from its inaugural launch date in mid-2015. Several factors could push Ethereum’s price toward $5,000, including the mass adoption of ETH-based applications, improved scalability, institutional adoption, regulatory environment, and market sentiment. Only time will tell if it can hold its place in the competitive field.
Ethereum’s Dencun Upgrade Represents a Major Step Forward
The Dencun upgrade, also referred to as Cancun-Deneb, is scheduled for March 13, 2024. It’s renowned for its proto-danksharding feature (EIP-4844), which is expected to reduce costs for Layer-2 transactions and improve data availability on Ethereum. There’s a focus on enhancing scalability via data blobs, a temporary data storage mechanism designed for Ethereum rollup solutions. Attention must be paid to the fact that Ethereum upgrades don’t typically follow a strict timeline on account of its decentralized nature and the number of client teams. The EIPs won’t change the direction of Ethereum – they’re mostly housekeeping updates.
Examples of Layer-2 blockchains that will benefit from the Dencun upgrade are Polygon, Arbitrum, Optimism, Mantle, and Metis. The technological upgrade continues to fuel optimism surrounding cryptocurrency. Ethereum will eventually become a fully scaled, maximally resilient platform, which will result in more users transacting on-chain. According to Vitalik Buterin, once the roadmap is complete, Ethereum will enter a period of stability, looking more like a system that optimizes for safety and predictability, not for impressing people. Before going live on the Mainnet, the Dencun upgrade will be tested on a test network.
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The SEC Was Explicit About Its Concerns with Crypto Market Manipulation
The SEC aims to identify and prosecute any type of misconduct that could threaten investors, capital formation, and the cryptocurrency markets more broadly. Consequently, federal and state regulators take into account the possibility of market manipulation behind the prices of Bitcoin, Ethereum, and other digital assets. For a long time, the SEC has been reluctant to approve cryptocurrency funds over fears of market manipulation. BlackRock developed an exchange surveillance protocol to address these concerns, and other ETF issuers have taken similar measures, such as settling in cash.
The question now is, what must happen for an Ethereum ETF to go live? Well, it takes a lot of work to get ETFs ready for the market, and the ongoing lawsuits against exchanges based on Proof of Stake blockchains, including Ethereum, don’t exactly help. To be more precise, approval is unlikely until these issues will have been resolved. Equally, Ethereum positioned itself as a technology platform and might be forced to compete as such; investors don’t hold ETH for its decentralization or money properties.