The last week has thrown the cryptocurrency market into turmoil. A surprising turn in US policy towards cryptocurrencies, particularly Bitcoin and Ethereum, has led to an impressive price increase. These developments are not only relevant in the short term, but could have long-term implications for the market as a whole. In the following, the events and their possible consequences are examined in detail.
The Ethereum ETF – A Surprising Turnaround
A significant event was the unexpected announcement last week that the SEC (Securities and Exchange Commission) may approve the Ethereum ETF. Initially a rejection was expected, but a sudden 180-degree turnaround meant that approval is now considered likely (the ETH ETF has now been officially approved). This news triggered a massive spike in Ethereum’s price, with a rise of over 20% in just one trading day. This is the biggest daily change since 2021
Ethereum price increase before ETF approval (Image: Tradingview)
Political changes and their impact
The political attitude towards cryptocurrencies seems to have changed significantly. It is particularly noteworthy that former US President Donald Trump now accepts cryptocurrencies as a means of payment for campaign donations. This indicates an increasing acceptance and support for cryptocurrencies at the highest political level. These developments could have far-reaching implications for the market as a whole, as they could herald a new era of regulatory support.
Market reactions and price movements
The market reaction to this news has been significant. Ethereum not only saw a surge, but also increased activity on trading platforms. There were significant deposits of stablecoins and Bitcoin on cryptocurrency exchanges to purchase Ethereum. On Coinbase, the price of Ethereum was higher than on other exchanges, indicating strong interest from American investors. A record volume of positive buy positions in Ethereum futures was also observed on Binance.
Bitcoin and the Correlation with Ethereum
The Bitcoin price also benefited from these developments and briefly approached its all-time high. The strong correlation between Bitcoin and Ethereum shows how closely the movements of the two most important cryptocurrencies are linked. Bitcoin experienced the largest short liquidation event since 2022, indicating a significant market surprise.
Bitcoin price last week (Image: Tradingview)
The role of the SEC and the ETF approval process
The SEC’s ETF approval process involves two main applications: the 19b4 application for listing and the S1 application detailing the fund structure. Recent developments suggest that the SEC may be expediting applications for Ethereum ETFs. Several applicants, including Fidelity and Grayscale, have already made changes to their applications to facilitate approval.
On Thursday, 8 Ethereum ETF 19b4 applications were finally approved by the SEC. However, before these can go to market, the S1 applications still need to be approved.
Impact on the entire crypto market
The policy changes and the prospect of an Ethereum ETF have impacted not only Ethereum, but the entire crypto market. Investors now expect greater institutional participation and a more general acceptance of cryptocurrencies. This could lead to significant market capitalization and a rise in prices in the long term.
The Influence of Political Developments
Political developments in the US, in particular the upcoming presidential elections, are playing a decisive role. Donald Trump’s new positive attitude towards cryptocurrencies could significantly change the regulatory landscape. His announcement to accept cryptocurrencies as a means of payment for campaign donations could put pressure on other political actors to adopt a pro-crypto stance as well.
Forecasts and scenarios for Ethereum
There are various scenarios for the future development of Ethereum. In the most optimistic scenario, the Ethereum price could rise to USD 8,000 by the end of the year if institutional investment increases. Even in the conservative scenario, an increase is expected, but with possible short-term corrections due to market fluctuations and regulatory uncertainties.
Conclusion
The last 24 hours have ushered in a potentially transformative phase for the cryptocurrency market. The unexpected turn of events at the SEC and political developments in the US could have far-reaching implications. While the short-term price movements are impressive, the long-term trajectory will depend crucially on how the regulatory and political landscape evolves. Investors should monitor developments closely as market conditions may remain volatile.
Author
Ed Prinz serves as Chairman of https://dltaustria.com, the most renowned non-profit organization in Austria specializing in blockchain technology. DLT Austria is actively involved in the education and promotion of the added value and application possibilities of distributed ledger technology. This is done through educational events, meetups, workshops and open discussions, all in voluntary collaboration with leading industry players.
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Disclaimer
This is my personal opinion and not financial advice.
For this reason, I cannot guarantee the accuracy of the information in this article. If you are unsure, you should consult a qualified advisor you trust. No guarantees or promises regarding profits are made in this article. All statements in this and other articles are my personal opinion.