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Cryptocurrencies rose Tuesday amid a late surge in optimism around the U.S. Securities and Exchange Commission’s decisions on spot ether exchange-traded funds applications, the first of which is due this week.
Ether led the rally, rising 12% to $3,785.42, according to Coin Metrics, after rocketing 20% on Monday.
“This sudden flip in expectations is an unexpected boon for investors who have been crying out for a driver after the [Bitcoin] halving passed and bitcoin ETFs were launched in the U.S. and Hong Kong,” said Antoni Trenchev, co-founder and managing partner of Nexo. “If the spot ETH ETFs are approved, altcoins should take off as ether is often a leading indicator for the rest of the crypto market.”
Ether rallies on ETF optimism
Meanwhile, bitcoin added 2% and was trading at about $71,350, extending an 7% gain from the previous day. The flagship cryptocurrency has been rising since last week’s April CPI reading showed inflation eased from the previous month, which could open the door again to rate cuts in the U.S. This week’s rally has pushed bitcoin above $70,000 for the first time in more than a month.
Crypto-related equities rode the wave. Coinbase and Robinhood, strong proxies to the crypto trading ecosystem, each rose about 2% in premarket trading, adding to Monday’s gains of 8% and 9%, respectively. MicroStrategy, which is more of a proxy for the price of bitcoin, added 1%. Bitcoin miners also gained slightly, with Riot Platforms and Iren (formerly known as Iris Energy) each advancing 2%, and Marathon Digital and CleanSpark each ticking higher by 1%.
The rally began suddenly on Monday, amid reports that the SEC has requested key document updates from potential ETF issuers and exchanges. A spokesperson for the SEC said the agency doesn’t comment on individual filings.
Now, investors are reconsidering the likelihood that the SEC might greenlight spot ether ETF applications. The previous consensus was that the SEC would not likely approve the funds, based on the lack of engagement by the agency on the filings. By contrast, in the weeks leading up to approvals for bitcoin ETFs, the SEC was reported to be engaging actively with fund issuers.
Final decisions on applications by VanEck and Ark Invest are due this Thursday and Friday, respectively.
BlackRock, Fidelity, Invesco, Grayscale and Bitwise Asset Management also have applications awaiting decisions this year.
An Ethereum ETF approval could put an end to the lull in crypto, according to Trenchev – which several investors and analysts had expected to last another three to five months.
“Crypto’s been in a slumber since March, and we’re still in that sideways space,” he said. “We need [bitcoin] to break through the record high before we can say categorically that we’ve broken out of the range.”
“Bitcoin should rise on the coat-tails of Ethereum if we get an approval, but let’s not get too far ahead of ourselves,” he added. “One month doesn’t make a summer. We’re in a data-centric market. If we get a hot CPI number or a really strong jobs report, you could see the lull continue.”