Ethereum ETF Approval Could Ignite 60% Rally as ETH Buying Intensifies

The potential approval of spot ether exchange-traded funds (ETFs) in the U.S. could trigger a substantial surge in Ethereum’s value, similar to the market reaction observed with bitcoin ETFs. Following the approval of spot bitcoin ETFs in January, Bitcoin’s price soared from $42,000 to over $73,000 within two weeks, according to CoinGecko data.

QCP Capital predicts that the approval of spot ether (ETH) ETFs in the U.S. could lead to a 60% rally in Ethereum’s price in the upcoming months. This forecast reflects the significant market response seen after spot bitcoin ETFs were approved earlier this year. The decision on the ether ETF is anticipated soon, with notable buying activity already occurring on both centralized and blockchain-based exchanges.

QCP Capital shared in a Thursday Telegram broadcast, “With Friday implied volatility above 100%, the market is expecting fireworks. VanEck’s ETF has been listed by the DTCC. We think approval is now highly likely, with trading expected as early as next week.” Implied volatility indicates the market’s expectation of future price movements.

CryptoQuant, an on-chain analytics firm, reported a surge in buying activity on centralized and blockchain-based exchanges. On Tuesday, holders purchased over 100,000 ETH in spot markets, marking the highest daily level since September 2023. This increased activity came as reports suggested a favorable decision, prompting some analysts to raise approval odds from 25% to over 75%.

Ether holder inflows surpassed the 100,000 mark on Wednesday, the highest daily flow since September. Open interest in ether-tracked futures also reached a record $14 billion, accounting for 67% of bitcoin’s open interest as of Wednesday—an unusually high level. Additionally, ether futures on the Chicago Mercantile Exchange hit a record notional trading volume of $2.85 billion on Tuesday, and ether options traded a record 1,135 contracts, totaling $216 million.

CryptoQuant noted, “Traders seem to be getting more exposure to ETH relative to Bitcoin. This is the largest daily spot buying from ETH permanent holders so far in 2024.” However, the firm also cautioned about potential volatility, as investors sent 62,000 ETH to exchanges—the most since early March. High exchange flows are typically associated with price fluctuations.

Despite the optimism, there is a risk of a “significant price correction” if the ETF application is rejected. Six issuers, including BlackRock, submitted updated ether ETF proposals this week, all removing plans to stake the token, which might have been a regulatory hurdle. Staking, the process of locking cryptocurrency to support blockchain operations in exchange for rewards, is seen as a form of passive income by many crypto traders. As of Thursday, annualized yields on ether staking were nearly 3%, according to data from popular staking service Lido.