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News/Ethereum Gains Edge Over Bitcoin as SEC Postpones ETF Verdict

Ethereum Gains Edge Over Bitcoin as SEC Postpones ETF Verdict

Van Thanh Le

Dec 7 2023

6 months ago3 minutes read
Anime-style chibi cubic robot in green and red, surprised by a holographic SEC and Ethereum display

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SEC Postpones Grayscale Ethereum ETF Decision

The U.S. Securities and Exchange Commission (SEC) has delayed its decision on Grayscale's Ethereum trust conversion to a spot Ethereum ETF. The new deadline is January 25, 2024. 

According to the SEC, it requires more time to evaluate the proposed rule change and address the issues raised. This move mirrors a previous delay for Grayscale's Ethereum futures ETF. Grayscale filed for this conversion in early October, following similar steps by firms like VanEck and Ark Invest.

Hyper-realistic digital art of a busy cryptocurrency trading floor with Ethereum's rising graph.webp

NYSE Arca proposed a rule change to list and trade shares of Grayscale's Ethereum ETF. The SEC opened this proposal for public comments in late October. The comment period has ended, leading to the SEC's extension.

There's a possibility of further delays. The SEC might start proceedings to approve or disapprove the rule change, potentially extending the deadline beyond January 2024.

Grayscale is also enhancing its Bitcoin Trust (GBTC), preparing for a potential spot Bitcoin ETF conversion. This positions them alongside competitors like BlackRock and Fidelity in the Bitcoin ETF space.

Ether (ETH) Gaining Favor Over Bitcoin: What the Data Says

The cryptocurrency landscape is witnessing a notable shift. As of November 6, 2023, Bitcoin's impressive 60% rally this quarter is overshadowed by Ethereum's (ETH) significant gains. Ethereum has climbed 35%, indicating a closing performance gap.

Year-to-date figures further highlight this trend. Bitcoin's surge stands at 163%, while Ethereum has recorded an 89% increase. This comparison underscores Ethereum's growing market presence.

chart.webp

In the futures market, Ethereum is outpacing Bitcoin. CME's Ether futures contract saw a 30% growth in notional open interest, reaching $711 million in just five days. Bitcoin's growth, in comparison, was 19%, amounting to $4.9 billion.

The premium on Ether futures over the spot index price now exceeds Bitcoin's by 5%. This metric signals increasing interest in Ethereum among traditional finance sectors.

Basis represents the difference between futures and spot prices Velo Data.png
Basis represents the difference between futures and spot prices. Source: Velo Data

Options traders are also showing a preference for Ethereum. The one-month Ether call-put skew has doubled to over 4%, suggesting a stronger call bias. Meanwhile, Bitcoin's one-month skew has decreased from 5% to 2%, indicating a shift towards puts.

These trends hint at a potential reallocation of funds from Bitcoin to Ethereum, reflecting Ether's rising stature in the cryptocurrency market.

Ethereum's Market Dynamics - Trump's Gains and Institutional Movements

Futuristic cityscape at dusk with neon-lit digital billboards and drones displaying SEC, Ethereum, and Bitcoin symbols.webp

Donald Trump's Ethereum Holdings

Donald Trump's Ethereum (ETH) portfolio has seen a significant boost. In just 30 days, his holdings increased by $1 million. This surge has elevated the value of his ETH wallet to over $3.7 million, a 37% jump. 

Previously, in October, Trump held 1,553 ETH, valued at more than $2.7 million. Ethereum's market performance has been notable, with its price rallying to a yearly high of around $2,310, then adjusting to just above $2,200 as of November 7. Analysts link this rise to falling interest rates and anticipation of a U.S. spot Bitcoin ETF.

Institutional Giants and Ethereum

On the institutional front, major players Galaxy Digital, Celsius, and FTX have been active. They deposited a total of 19,822 ETH, worth $45.2 million, into exchanges. This move suggests a possible plan to sell part of their Ethereum holdings. Amidst bankruptcy proceedings in 2023, Celsius and FTX have been selling Ethereum and other cryptocurrencies. 

Galaxy Digital deposited 9,179 ETH ($20.9M) to Binance.png
Galaxy Digital sent 9,179 ETH ($20.9M) to Binance. Source: SpotOnChain

Galaxy Digital deposited 9,179 ETH (valued at $20.9 million) to Binance, retaining 10,038 ETH (around $22.8 million). Celsius Network moved 7,500 ETH to Coinbase, totaling $17.05 million. FTX transferred 3,143 ETH to Coinbase, worth $7.21 million. These significant transactions could impact Ethereum's market value, potentially driving it down.

Conclusion

The SEC's postponement of Grayscale's Ethereum ETF decision to January 2024 signifies a cautious regulatory stance in the evolving crypto landscape. Ethereum's impressive performance in 2023, overshadowing Bitcoin, and the strategic movements of institutional giants and high-profile investors like Donald Trump, highlight a dynamic shift in the cryptocurrency market.

FAQs

1. What's the Impact of the SEC's Delay on Grayscale's Ethereum ETF?  

The SEC's postponement to January 2024 for Grayscale's Ethereum ETF decision impacts investor sentiment and market dynamics. It reflects regulatory caution and uncertainty in the crypto ETF space, potentially affecting Ethereum's market performance and investor strategies.

2. How Does Ethereum's Performance Compare to Bitcoin in 2023?  

In 2023, Ethereum has shown remarkable growth, outpacing Bitcoin. Ethereum's 35% climb and a 89% year-to-date increase highlight its growing market presence, challenging Bitcoin's dominance. This shift is evident in futures and options markets, where Ethereum is increasingly favored.

3. Why Are Institutional Giants Like Galaxy Digital and Celsius Selling Ethereum?  

Institutions like Galaxy Digital and Celsius are selling Ethereum, likely for liquidity needs or strategic portfolio adjustments. Amidst financial challenges, these sales could be a response to market conditions or internal restructuring, influencing Ethereum's market value.

4. What Does Donald Trump's Ethereum Portfolio Indicate About Market Trends?  

Donald Trump's significant Ethereum holdings, which saw a $1 million increase in value, indicate growing interest in Ethereum among high-profile investors. This trend reflects Ethereum's robust market performance and its appeal to diverse investor segments.

5. What Are the Prospects for a Spot Bitcoin ETF in the U.S.?  

The prospects for a U.S. spot Bitcoin ETF are still uncertain. Regulatory hesitance, as seen with the SEC's delay on Ethereum ETF decisions, suggests a cautious approach. However, growing institutional interest and market maturity could eventually lead to approval.

This article has been refined and enhanced by ChatGPT.

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