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Bitcoin fell late Wednesday afternoon after the Securities and Exchange Commission gave the green light for the first-ever spot bitcoin ETFs to trade in the U.S., as expected.
The cryptocurrency’s price traded lower by less than 1% at $46,525.03, according to Coin Metrics, trimming earlier losses. Meanwhile, the price of ether climbed 12% to $2,546.47, its highest level since May 2022, as investors sold bitcoin on the long-awaited news and rotated into the second-largest cryptocurrency.
Other coins in the Ethereum ecosystem gained too. The token tied to Polygon gained 14%, Chainlink advanced 12% and Uniswap soared 15%.
The ETF approval has been one of the most widely anticipated events for crypto investors over the past few months. It’s regarded by many as a key catalyst for bitcoin and crypto broadly this year. The bull case is that it will bring a flood of new investors into the market.
Bitcoin’s price is up 77% since late August, when optimism began to build following Grayscale’s big legal win against the SEC over the regulator’s refusal to let it convert its popular Bitcoin Trust (GBTC) into an ETF.
“Now that the bitcoin ETF speculation has come to fruition it looks like traders are rotating to ether to get ahead of the next narrative, an ETH ETF, while ETH looks relatively cheap compared to most other tokens,” said Conor Ryder, head of research at the stablecoin company Ethena Labs. “What is interesting is that the fake news last night revealed a lot of hands a day early and I think people are catching up to the rotation today.”
The decision by the SEC was widely expected to come Wednesday. The evening before, however, a false post from the SEC’s X account stated the regulator had approved bitcoin ETFs for trading. Shortly after, the SEC deleted the post, said its account on X was compromised and that it had not approved the ETFs. The price of bitcoin popped and then dropped after each respective event.
The SEC is due to give decisions on spot ETH ETF applications beginning in May. BlackRock, Invesco, Ark and VanEck are among the firms in line for approval, as well as Grayscale, which is seeking to convert its existing Ethereum Trust (ETHE) into an ETF.
“It’s all about getting ahead of the narratives — bitcoin has rallied versus ether for the last six months thanks to spot ETF speculation, and ETF approval ties a bow on that narrative,” Ryder said. “Meanwhile ETH has struggled to find any momentum and has underperformed compared to most of the smaller Layer 1s like Solana.”
Ether lagged bitcoin in 2023, rising just 90% compared to bitcoin’s 157%. Ether rallies tend to follow bitcoin when crypto bull markets heat up, and precede altcoin rallies.