Ethereum and Solana Cryptocurrencies Steal the Spotlight from Bitcoin
Ethereum and Solana Cryptocurrencies Steal the Spotlight from Bitcoinm Ethereum and Solana cryptocurrencies have witnessed a significant shift in interest away from Bitcoin, as attention turns towards exchange-traded funds (ETFs) in the U.S. that focus on these smaller digital currencies.
Surge in Solana and Ethereum Prices Solana experienced a significant price increase last Thursday, the highest in over a month, after VanEck filed an application to launch an ETF for the cryptocurrency. Meanwhile, Ethereum has outperformed Bitcoin since the beginning of 2024, driven by the impending final approvals for the launch of ETFs focusing on Ethereum.
Bitcoin at the Start of 2024 At the beginning of the year, Bitcoin was the prominent star with the launch of the first spot ETFs in the United States, attracting substantial inflows and pushing Bitcoin’s price to a record high of $73,798 in March. However, both demand and price have since declined.
Approval for Ethereum ETFs The U.S. Securities and Exchange Commission (SEC) recently received proposals to list spot ETFs for Ethereum. Reports suggest that final approvals could be issued next week, increasing analysts’ optimism about the expected demand for these funds.
Positive Outlook for Ethereum ETFs Companies like Galaxy Digital Holdings and Fundstrat Global Advisors expect U.S. ETFs to record net inflows of $5 billion in the first five months. Sean Farrell, Head of Digital Asset Strategy at Fundstrat, mentioned in a research note that investors are adopting highly bearish expectations for the anticipated launch of Ethereum ETFs, predicting a boost from hedge funds seeking to profit from the spread between the spot price and futures contracts.
Market Performance for 2024 Ethereum's price has risen by 51% since the beginning of the year, surpassing Bitcoin’s 45% increase. Solana’s value has surged by 754% over the past twelve months. U.S. Bitcoin ETFs have attracted $14.5 billion in net inflows since their listing in January.
SEC's Stance on Cryptocurrencies The SEC has shifted its stance towards approving spot ETFs that track Ethereum after reluctantly allowing Bitcoin investment funds following a court ruling in 2023. While Bitcoin is considered a commodity, the SEC, led by Gary Gensler, views most other digital currencies as unregistered securities that should be regulated. Gensler’s stance on whether Ethereum is considered a security remains ambiguous.
Challenges Facing Solana The SEC has classified Solana as one of over 12 currencies as unregistered securities in various lawsuits, raising questions about whether the regulator will approve ETFs tracking Solana. VanEck’s application for an ETF does not guarantee SEC approval.