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Ethereum's price surges toward $4,000 as spot ETH ETFs ignite bull market

28 May, 2024

The launch of spot ETFs for Bitcoin (BTC) has been a key factor behind the recent appreciation and new all-time highs for the original cryptocurrency, which drove positive momentum throughout the crypto sector. Now, with the approval of spot Ethereum (ETH) ETFs, traders are optimistic about Ethereum's potential to rally well above $4,000.

Spot Ethereum ETFs approved in the US

In a second significant decision this year, the United States Securities and Exchange Commission (SEC) has officially approved spot Ethereum exchange-traded funds (ETFs) for the country. Pending the necessary S-1 SEC registration, spot Ethereum ETFs could debut on exchanges in the coming weeks or months.

The SEC has approved the 19b-4 filings from several major firms, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. This approval paves the way for these spot Ethereum ETFs to be listed and traded on their respective exchanges.

Unlike spot Bitcoin ETFs, which were approved via a vote by a five-member committee that included SEC Chair Gary Gensler, the spot Ethereum ETFs received approval from the SEC's Trading and Markets Division.

Spot ETH ETFs: What are we waiting for?

Another key difference between the spot ETFs for Bitcoin and Ethereum is that the 10 Bitcoin ETFs began trading immediately after their approval because they had also secured clearance for their S-1 forms. In contrast, the spot Ethereum ETFs are still awaiting their S-1 SEC registration, which means they might not hit exchanges for several weeks or even months.

Despite the official approval, the debut of spot Ethereum ETFs on exchanges depends on the completion of the S-1 registration process with the SEC. Market participants eagerly await this final step, which will allow these ETFs to start trading and potentially drive further interest in Ethereum.

With this regulatory green light, the US market is set to see a significant development in the availability of cryptocurrency investment options, reinforcing Ethereum's position in the financial ecosystem.

Ethereum climbs near $4,000 on ETF news

On 27 May, Ethereum's price continued its ascent, nearing $4,000 with a 3.5% gain for the day. Looking at the week, Ethereum's performance has seen an impressive surge, rising from a low of $3,048 on 20 May to a 10-week high of $3,964 by 27 May. At the time of writing on 28 May, ETH's price appears to have settled down somewhat, lingering at around $3,850.

The surge in Ethereum's price over the past week has been largely driven by market anticipation surrounding the approval of spot Ethereum exchange-traded funds (ETFs) in the United States. Although initial reactions were muted, the approval has set the stage for a significant move toward $4,000.

Crypto analyst and influencer Jelle noted that Ethereum has completed a prolonged accumulation phase and is now poised to "enter the stratosphere" following the ETF approvals. In a post on X, Jelle expressed that, despite the longer-than-expected wait, the market is "finally seeing bull-market Ethereum again".

Other well-known analysts, such as Michaël van de Poppe (MN Capital) and Matthew Hyland, made optimistic predictions for ETH based on indicators in the weekly ETH/BTC chart. These traders highlight that the weekly relative strength index (RSI) indicated a bullish divergence, marking a break from Ethereum's downtrend and the start of a capital rotation from Bitcoin into altcoins after an extended crypto winter. Van de Poppe remarked, "The chances are significant that the 2.5-year bear market is finally over for Ethereum".

Another positive indicator for Ethereum is recently released data from CryptoQuant that shows a decreasing ETH balance on exchanges, reaching a six-year low of 13.58 million ETH on 20 May. This trend signifies that traders are adopting long-term investment strategies, reflecting increased confidence in Ethereum's long-term potential and value.

Overall, the approval of spot ETH ETFs has reignited bullish sentiment in the market, with traders and analysts alike predicting a continued rally for Ethereum as it approaches the $4,000 mark.

Raining cats and frogs: Ethereum meme coins PEPE, MOG hit all-time highs following Ethereum ETF approvals

Ethereum may be enjoying its time in the sun, but it's not alone. Other tokens joined the surge, riding the coattails of the world's second-largest cryptocurrency. Ethereum is a big, happy family, with plenty of altcoins having been built on the Ethereum computing ecosystem.

Ethereum-based tokens Pepe (PEPE) and Mog (MOG) reached record highs on Monday following the approval of key Ethereum ETF filings in the US. PEPE and MOG, themed around a frog and a cat, respectively, rose 11% and 45% in 24 hours, benefiting from the positive sentiment around Ethereum ETFs. Trading volumes for PEPE hit over $1.8 billion, a significant increase from its usual range of $400 million to $600 million.

Because these tokens are built on Ethereum, traders could be using them as side bets: high-risk, high-reward gambles tied to Ethereum's success. Open interest in futures for PEPE and MOG increased as new capital entered the market. However, the long-to-short ratio for PEPE suggests that traders are betting against further price rises.

Futures data showed a spike in open interest for PEPE and MOG. PEPE's open interest rose to $720 million from $550 million last week, while MOG's increased to $8.3 million from $5 million. Rising open interest typically signals new money entering the market, potentially leading to further price volatility.

The rally in these tokens began when analysts raised the odds of Ether ETFs being approved for trading in the US. PEPE has even entered the top 20 cryptocurrencies by market capitalisation, reaching over $6 billion and making early investors significant profits from small initial investments.

Since 2023, meme tokens, often perceived as having little intrinsic value, have risen in prominence as speculative investments tied to the performance of their underlying ecosystems. Several Solana-based meme tokens surged between December and March as Solana (SOL) gained traction. Additionally, the Avalanche Foundation announced in December that it would invest in meme tokens built on its network, recognising the cultural and memetic value these tokens can bring to investors.

As Ethereum continues to show strength, meme tokens like PEPE and MOG are likely to remain in the spotlight, attracting both speculation and investment. Floki (FLOKI), a dog-themed token based on the Ethereum blockchain, also made recent gains, although this may be instead linked to activity from the meme stock trading community following another surge of Gamestop stock this week.

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