Why Bitcoin, Ethereum, and Dogecoin Rallyed on Tuesday

Several major cryptocurrencies rallied on Tuesday amid news of growing cryptocurrency adoption and speculation surrounding the timing of the approval of the first Ethereum-focused exchange-traded fund (ETF).

When all is said and done in today’s regular trading session, the price will be Bitcoin (BTC 2.02%) It rose 4.5%, Ethereum (ETH 0.83%) It rose 1.8%, Dogecoin (viceroy 8.00%) It rose 12.2%.

If Bitcoin ETF Is Approved, Is Ether ETF Next?

Bitcoin price topped $57,000 today for the first time since December 2021, likely fueled by record inflows into Bitcoin ETFs. According to data from cryptocurrency research firm CoinShares, approximately $2.5 billion flowed into digital asset investment products last week, with Bitcoin funds accounting for 99% of the inflows. This influx of capital follows the historic decision by the U.S. Securities and Exchange Commission (SEC) last month to simultaneously approve the first 13 applications for a spot Bitcoin ETF.

Of course, this approval was the culmination of months of speculation after the SEC declined to appeal a federal court ruling that blocked cryptocurrency asset manager Grayscale Investments from making a splash last August. Grayscale Bitcoin Trust With ETFs. This inaction has forced the SEC to retake responsibility for moving forward with the Bitcoin ETF approval process.

In the weeks leading up to the SEC’s majority thumbs up, many opportunistic traders were taking advantage of the broader cryptocurrency rally, noting that ETFs are a much more accessible medium for investors looking to put money into cryptocurrencies. ETFs can be bought and sold throughout normal trading days through almost any online brokerage, as opposed to previously requiring investors to open separate cryptocurrency accounts or wallets through specialized cryptocurrency brokers. The approval also stands as a de facto vote of confidence from government agencies in cryptocurrency ETFs as a legitimate investment medium.

Still, it’s worth noting that the major cryptocurrency fell for the first time since the official launch of the first spot Bitcoin ETF six weeks ago, following a months-long rally that began in October.

However, capital inflows from spot cryptocurrency ETFs, including a potential Ether ETF, have the potential to increase overall cryptocurrency market capitalization by a total of more than $1 trillion over the long term, according to data analytics firm CryptoQuant.

To that end, cryptocurrency traders now turn to the May 23, 2024 date, the final deadline for the SEC to approve (or reject) applications for a spot Ether ETF from several investment management firms, including VanEck and Ark’s 21Shares.

What’s next for cryptocurrency investors?

Of course, there is no guarantee that a spot Ether ETF will be approved in May. However, given the similarity of the assets and the precedent set by the dozens of Bitcoin ETFs currently in existence, it seems highly unlikely that the SEC will reject it, with the cryptocurrency ETF floodgates already open.

But with the May 23 deadline now less than three months away, Bloomberg and analysts at both companies Standard Chartered In recent weeks, it has been thought that anticipation of the first Ether ETF could spark an extended rally similar to the one leading to the approval of the first Bitcoin ETF. Considering that the Bitcoin ETF hype cycle appeared to spark its own bounce in the roughly three months leading up to approval, it is not surprising that speculation is now increasing surrounding a potential Ether ETF approval timeline.

“Ethereum spot (ETF) is definitely tied to Bitcoin spot,” Bloomberg ETF analyst Eric Balchunas said last month. He said, “It’ll go anywhere. It’s basically like following a 15-foot rope.”

After all, keep in mind that profits based on this hype can be fickle in the short term. However, as the world appears to be steadily embracing cryptocurrencies as a valid place to park capital, billions of real dollars are flowing into crypto assets every week. If that continues, it wouldn’t be surprising if the prices of major cryptocurrencies continue to rise accordingly.