Key Takeaways:
The cryptocurrency market is starting to show slight signs of recovery as it puts behind a disappointing Q2. The sector’s resurgence is being fueled by Ethereum (ETH) – the world’s second-largest cryptocurrency by market capitalization, which has surged by 5% since yesterday, boosting it past the $3,500 level.
Large-scale ETH Holders Rake In Profits As ETF Approval Edges Closer
The spike resulted from an increase in whale activity ahead of the highly-anticipated decision on the Ethereum exchange-traded funds (ETFs) scheduled on July 8th.
On-chain data provider ‘Spot on Chain’ reported significant activity on the Ethereum blockchain by a whale called Abarax Capital, which withdrew 60,000 ETH, valued at $203 million, from the Bitfinex crypto exchange at $3,387 per token in the past 24 hours.
The whale then lent the Ether to the decentralised lending platform Spark Finance (SPARK) to borrow $119 million in stablecoins against it and deposited the funds to Binance.
Following that transaction, ETH price rallied by another 3%, giving Abarax Capital an unrealized profit of nearly $6.5 million on their holdings. The daily trading volume of Ethereum is up 50% after hitting $9.8 billion.
In anticipation of the eagerly awaited Ethereum spot ETFs, whales have been busy swapping other altcoins for ETH. Last week, a crypto whale holding PEPE converted $18 million worth of the memecoin to ETH expecting a major rally.
Bitwise Analyst Predicts Ethereum Spot ETF to Attract $15 Billion in Net Inflows Within 18 Months
Ether’s journey to the upside began last week following news that asset managers Bitwise and VanEck filed a Form-8A allowing its Ethereum ETFs to begin trading as soon as they are approved by the US Securities and Exchange Commission (SEC).
The securities watchdog had already greenlit 19b-4 filing for the ETFs on May 23rd from 8 issuers but now must approve their S-1 registration statements before the crypto investment vehicle can be traded on major stock exchanges.
However, recent reports suggest that the funds could face a slight delay with the launch as the SEC sent back the S-1 forms to issuers asking them to resubmit them by July 8th.
Despite the slight setback, the market is optimistic about the ETF’s prospects. Matt Hougan, the chief investment officer at Bitwise, predicted that the spot Ethereum ETFs could potentially attract a net inflow of $15 billion in their first 18 months of trading.
His projection factors in several key points, such as a comparison of Ethereum’s market cap to that of Bitcoin (BTC), the conversion of the Grayscale Ethereum Trust (ETHE) into a spot market-traded ETF, the international crypto exchange-traded product (ETP) market, and BTC’s “carry trade”.
Hougan says that in proportion to the crypto assets’ market capitalization, investors may allocate 74% of their capital to Bitcoin ETFs and 26% to Ethereum, respectively. Bitcoin ETFs currently have about $56 billion in assets under management (AUM), and this figure is expected to reach $100 billion by the end of next year as major banking institutions like Morgan Stanley and Merill Lynch accept them.
The Grayscale Ethereum Trust (ETHE), which holds $10 billion worth of ETH, could see its valuation cut short as it is converted into an ETF, resulting in an overall net flow of $25 billion.
However, the Bitwise CIO says internationally-traded Ethereum ETPs could potentially gather only 22% of the combined market share compared to BTC, further reducing the estimate to $15 billion.
Furthermore, Hougan expressed that institutions are unlikely to participate in an Ethereum “carry trade” as they do with Bitcoin ETFs because the SEC does not allow staking with the upcoming US spot Ethereum ETFs.
A carry trade is an investment strategy that involves buying an asset in the spot market and shorting its equivalent in the futures market. The goal here is to profit from the price difference when the futures contract backing the asset trades at a premium to its spot price.
Ethereum ETFs Could Be Listed for Trade in the US Within 21 Days
Meanwhile, Nate Geraci, president of ETF Store – an independent investment advisor, stated that the S-1 revisions requested by the SEC are minor and the Ethereum ETF could be approved for trading within the next 14-21 days.
Although the timeline for their launch remains uncertain, the SEC has hinted that investment funds could be listed by the end of the summer. Experts believe this could probably keep the price of ETH moving forward.
At the time of writing, Ethereum (ETH) is trading at $3,485 – up 3.65% over the past 24 hours.
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