Notable Differences Between Approval of Bitcoin ETF and Ethereum ETF

  • June 5, 2024
  • Jennifer Moore
Notable Differences Between Approval of Bitcoin ETF and Ethereum ETF

The approval of Ethereum ETF is a major milestone in the history of cryptocurrencies. On 23rd May 2024, the Securities and Exchange Commission (SEC) approved the Ethereum ETF. This is months after it approved the Bitcoin ETF in January 2024. Many crypto enthusiasts, however, wrongly assume that the impact and significance of these two ETF approvals shall be the same. Therefore, it is essential to highlight the notable difference between the two for the larger interests of crypto investors, traders, and enthusiasts.

Approval of Bitcoin ETF and Ethereum ETF

Bitcoin ETF and Ethereum ETF were both approved by the SEC. The approval of the Bitcoin ETF happened in 2024 January. The approval has opened many opportunities for both institutional and retail investors to track Bitcoin’s movements without directly holding the crypto. Contrastingly, the approval of Ethereum ETF has led to its classification as a security. It is also true that the legislation involving Ethereum will deal with a complex regulatory environment. 

Impact of Bitcoin ETF and Ethereum ETF

The overall impact of Bitcoin ETF and Ethereum ETF has some similarities but also has many noticeable differences. The foremost similarity is that both these events have generated a lot of enthusiasm among crypto users and investors. For instance, the approval of Bitcoin was a major step in its acceptance and it allowed investors to engage with crypto. 

Trading Volumes and Price Fluctuations

The approval of the Bitcoin ETF has resulted in a substantial price rise and an increase in trading volume. Due to heightened enthusiasm, investor confidence grew manifold towards Bitcoin. The enthusiasm towards Ethereum is comparatively low. However, like the Bitcoin ETF, Ethereum also experienced a price surge. The levels of price surge for Bitcoin were more and helped Bitcoin gain unprecedented popularity.

Major Considerations and Regulatory Challenges

The impact of approving the Bitcoin ETF led to considerable regulatory scrutiny. The potential for market manipulation and the urgent need to protect the interests of investors became a top priority. However, the popularity of Bitcoin helped it establish its dominance in the crypto market.

The approval process of Ethereum ETF was more subtle and the debate largely concentrated on its status as a security. The Ethereum ecosystem is more complicated and the approval of the equity-traded fund will have a broader impact on its smart contract capabilities. There were additional layers to the regulatory considerations.

Impact on the Crypto Market

The impact of approving Bitcoin ETF and Ethereum ETF also were different in the crypto sector. For instance, in the case of Bitcoin ETF, the approval further consolidated the dominant position of Bitcoin. The approval currently is increasing the confidence levels of investors and many are certain that it will integrate with the traditional financial systems. 

On the other hand, the approval of Ethereum ETF signified its expansion in the crypto market. The approval will positively affect the entire Ethereum eco-system comprising applications like smart contracts, non-fungible tokens (NFTs), and Decentralized finance (DeFi). The versatility of Ethereum will significantly improve after this approval. 

Also Read- The Importance of Blockchain Awareness

Bottom Line

The approval of Bitcoin ETF and Ethereum ETF will have different impacts on the respective cryptocurrencies. However, the approval itself is a strong indication that cryptocurrencies are gaining mainstream acceptance. In the long run, this may well end the monopoly of centralized financial institutions and allow DeFi to supplant it. The approval of the ETF will also lead to changes in market dynamics and investor behavior. 

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