How Ethereum Could React to Bitcoin ETF Approval

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As the U.S. Securities and Exchange Commission (SEC) nears its decision deadline on January 10 for the Bitcoin (BTC) ETF, the crypto market, including Ethereum (ETH), the second-largest cryptocurrency, is bracing for potential impacts.

Ethereum ETF Prospects

Here we go … expect more spot #ethereum ETFs filings in the coming days.

NOTE: this is an S-1 and not a 19b-4. Which means it does not start a clock in any way … yet. Expect 19b-4’s soon. https://t.co/sNus2vr5qV
— James Seyffart (@JSeyff) September 6, 2023

The approval of a Bitcoin ETF could pave the way for other crypto-based ETFs, including Ethereum. In December 2023, the SEC delayed decisions on several Ethereum ETF applications in the U.S. to May 2024. These include applications from Hashdex Nasdaq, Grayscale, VanEck, and a joint application from ARK Invest and 21Shares. The delay is part of the SEC’s process of gathering public input before making a decision. Notably, Ethereum has not been classified as a security in the SEC’s recent lawsuits against crypto exchanges, nor has the SEC challenged the leading altcoin’s classification through the ETF registration process with the Commodity Futures Trading Commission (CFTC).

Ethereum-Bitcoin Correlation

The #Ethereum supply crisis on exchanges is worsening day by day.📉🚨

Every day, supply is getting tighter, which indicates even stronger demand for #ETH.

Massive gains ahead. pic.twitter.com/k0SQJAUDHW
— Leon Waidmann | On-Chain Insights🔍 (@LeonWaidmann) January 6, 2024

Ethereum’s price is closely correlated with Bitcoin’s price. A Bitcoin ETF approval could lead to increased crypto exposure among traditional investors, potentially resulting in a surge in the altcoin’s price. Conversely, a delay or denial of the Bitcoin ETF could exert short-term bearish pressure on the market.

ETH Price Technical Analysis

Weekly chart for ETH/USDT (Source: TradingView)

Technically, ETH’s price is near the resistance trendline of a rising wedge pattern. A delay or denial of the Bitcoin ETF could lead to a price correction toward the wedge’s lower trendline near $1,865 by February.

On the other hand, approval of the ETF may lead Ethereum to invalidate its rising wedge setup in favor of an ascending triangle reversal pattern. The upside target of this pattern is near $3,870 by March, a 75% increase from current levels, coinciding with the 0.786 Fibonacci line.

As the crypto community awaits the SEC’s decision, Ethereum’s price reaction will be a key indicator of the market’s sentiment and the potential for broader acceptance of cryptocurrencies in traditional investment portfolios.

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Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

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