Ethereum is quickly approaching a tipping point in it’s history. The Securities and Exchange Commission is reviewing applications for ETF approval, meaning that if approved, Ethereum could move out of the shadows of the crypto market and into the daylight of the stock market.
Investors like this idea because it gives them the opportunity to make Ethereum part of their long-term portfolios with all the tax advantages of stocks. This means that people can essentially by Ethereum as part of their retirement accounts without having to use a crypto wallet or after-tax dollars.
It would also open up many more options related to Ethereum in the world of stock options and derivative trading, which again could be purchased with pre-tax dollars. Bitcoin, the big dog of the crypto market debuted its first Exchange Traded Funds in January via large players in the world of stocks such as Blackrock.
Additionally, Ethereum has many practical applications related to decentralized-finance applications, Non-fungible tokens, and application design, among many others. Here are some key facts about Ethereum’s price movements as of today that seem to support this view:
Ether, the native cryptocurrency of the Ethereum blockchain, rose to $3,650 early on Tuesday, up more than 17.5% over the past 24 hours.
Bitcoin, the world’s most valuable crypto token, briefly crossed the $71,000 threshold before settling at around $70,880—up more than 6.1% from the previous day.
Other popular tokens like Dogecoin and Binance’s BNB were also up 8.5% and 7% respectively.
Bitcoin and altcoins are hot on the heels of Ethereum with Bitcoin hitting close to all time highs:
Bloomberg analysts Eric Balchunas and James Seyffart have revised their approval probability from 25% to 75%, citing a rise in discussions about expedited 19b-4 filings, a critical step for ETF launches.
This potential regulatory shift has not only elevated Ether’s price but also spurred a wider market rally, with Bitcoin trading above US$70,000 for the first time since April.
Buy the News or Sell It?
Ethereum, unlike many altcoins has a limited and shrinking supply. Over time, each Ethereum will coin will become more valuable as time goes on and more Ethereum is burned. Additionally, if the Bitcoin spot ETF approval chart is our best model for what will happen if the Ethereum spot ETF is approved, it would seem to indicate after approval, a consolidation (small drop) and then a surge upward as money starts flowing into the Ethereum ETF’s, driving up Ethereum.
The Near-Term Bull Case for Ethereum
First off, if the ETF is not approved, a rapid selloff will likely occur. Many analysts think that the approval of the Ethereum ETF is priced into the current high price because investors want to get into Ethereum before the anticipated approval.
While the market reacts positively, Seyffart warns that the necessary S-1 registration statements (for approving Ethereum ETF’s) could still face delays.
The Near-Term Bear Case for Ethereum
Crypto markets high volatility is always a concern. Crypto’s are very sensitive to negative news and typically will drop precipitously on bad news and conversely soar on good news due to their speculative natures. Large scale investors (whales) will be looking closely at this and moving money around accordingly.
The Best Way To Invest
Investors who use dollar cost averaging as a way to deal with volatility have been rewarded in the Ethereum market. What is dollar-cost averaging? Dollar cost averaging is when an investor buys the same amount of shares of a company or in this case crypto coins each month, year, week, or any desired time interval. Over time, especially with an asset as volatile as crypto, the investor gets a fair average price for their investment over time. When the price goes down, their investment buys more of the asset, when the price goes up, it buys less. Ethereum seems to be a great asset to do this with, historically speaking. Back in May of 2023, Ethereum was trading at around 1800 a coin. It has seen ups and downs since then, but has been very bullish over this time period to where it currently sits at $3700 or so a coin. If you go back to November of 2017, each coin was worth $320.88. That means in five years this asset has gone up by a factor of 10. Your $300 in 2017 would now be worth over $3700. Dollar cost averaging allows the investor to invest without having to constantly check the price of the asset, fretting over every tiny drop and panic selling on the big drops.
“Fear is the most contagious disease you can imagine. It makes the virus look like a piker.”
Final Analysis
If you are thinking of buying Ethereum, it may very well take off on a tear if the spot ETF is approves, but if the approval does not happen (the deadline is May 23), look out! At this point, if you have not already bought Ethereum, I would suggest waiting to see if the Spot ETF is approved plus a week or two to see what happens. If the ETF gets approved, you can feel pretty good about the changes of ETH hitting new highs and doing some really spectacular things in the future, if not, look out! If you are anticipating the approval of the ETF and have already bought in, be sure to set stop losses just in case the price falls due to the spot ETF not being approved.
Discussion Question?
Where do you Think Ethereum’s Price is Headed in the next Few Months, Years, or Longer? Do You Think it is a Good Investment? Join the Discussion Below!
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**I am not a financial advisor and this is not financial advice
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