Yesterday, Ethereum fell 4% shortly after the United States historically approved a spot Ethereum exchange-traded fund (ETF).
Many thought that the approval of a spot ETF in the U.S. would be a bullish event for the world’s second-largest cryptocurrency. And that may still be the case. But hours after the approval by the U.S. Securities and Exchange Commission (SEC), Ethereum’s price was barely buoyed, rising just 1%.
According to CoinGecko, Ethereum was trading at $3,840 at the time of the approval, but is now down 3.6% to $3,701, with the drop becoming even more pronounced in the past 24 hours as news of the approval began to spread, dropping 6% from $3,926.
This is a classic example of “buy the rumor, sell the news,” as the price of Ethereum surged 9% within minutes of rumors spreading that ETF approval was imminent. Now that the news has been confirmed, the market has begun selling.
Bitcoin saw a similar move after the Spot Bitcoin ETF was approved in January. The morning after the approval, Bitcoin plunged about 6% and then plummeted 12% over the next week. In the end, BTC experienced a full month of volatility before returning to the price it was at the day the ETF was approved.
But as that happened, trading volume from 10 spot Bitcoin ETFs flooded into the market and Bitcoin price began to rise steadily towards new all-time highs.
British multinational bank Standard Chartered has predicted that both ETH and BTC will surge following the approval of an Ethereum ETF.
“The approval of an ETH ETF would further legitimize the sector and be a positive for BTC,” said Jeff Kendrick, a digital asset researcher at Standard Chartered Bank, adding that he expects BTC to hit a new all-time high by the end of the week.
If the same thing were to happen with Bitcoin, it may not happen anytime soon, with BTC currently down 3.5% over the past 24 hours.
Editor: Stacey Elliott.
