Why ether, not bitcoin, is the winning crypto trade so far in 2024 (Crypto:ETH-USD)

It’s been less than a week since the U.S. Securities and Exchange Commission greenlit the country’s first spot bitcoin exchange-traded funds, marking a major milestone that’s expected to lure more investors into the 15-year-old cryptocurrency. Since then, though, bitcoin’s (BTC-USD) price action has been underwhelming, falling to $43.3K as of Friday afternoon from ~$46K at the time of approval.

Instead, investors appear to have turned their focus to ether (ETH-USD), the second-largest cryptocurrency, as the token’s price advanced since the clearing of 11 bitcoin ETFs. Since the start of 2024, ETH has climbed 14.4%, while bitcoin (BTC-USD) perked up 3.7%, as seen in this chart.

Perhaps market participants are betting ETFs investing directly in ether (ETH-USD) are next to get the nod from the SEC. Bitcoin (BTC-USD) has been on the upswing for months in anticipation of ETFs holding the token coming to market, jumping more than 160% this past year. But weakness in BTC since the approval suggests the months-long surge may be nearing a halt, at least for now.

“Now that the Bitcoin ETF is officially live, the public image and trust in Bitcoin is shifting towards a positive image,” said Nathan Leung, lead content creator at Cryptonauts. “This will attract new investors and grow awareness. However, hype is temporary… and it’s safe to assume an Ethereum ETF will be engineered for another hype cycle.”

BlackRock (BLK) CEO Larry Fink sees “value in having an Ethereum ETF,” he told CNBC in an interview on Friday, one day after the bitcoin ETFs went live. “These are just stepping stones towards tokenization and I really do believe this is where we’re going to be going.”

Fink isn’t all talk. The asset manager’s iShares unit filed with the SEC seeking registration for a spot ether (ETH-USD) ETF. If that’s not enough, BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) was one of the bitcoin ETFs to debut in the U.S. on Thursday. The product has already garnered some $1B of the total $4.6B of trading volume that the ETFs saw in total.

Among the other firms in line for ether ETF approval are: Grayscale, Invesco (IVZ), VanEck and Ark.

The increased optimism over bitcoin (BTC-USD) ETFs led to ether (ETH-USD) underperforming its rival in 2023, with BTC surging 165.1% compared with ETH’s 93.8% jump. Now, it seems the tables are starting to turn.

Aaron Rafferty, CEO of technology company StandardDAO, expects ether (ETH-USD) will see a similar bull run as BTC ahead of potential ETF approval. “If ETH is the next up, then it’s safe to expect a similar climb prior to the event,” he said.

Some think an ether (ETH-USD) ETF approval will be a tougher achievement, as SEC Chair Gary Gensler views all crypto assets, except bitcoin, as securities, and thus, subject to securities regulations. Bitcoin (BTC-USD) is deemed a commodity by the SEC.

“There are a number of applications in front of the SEC for ETH spot ETFs and we should have an answer in May of this year, and if denied I would expect those applicants to continue addressing the SEC’s concerns and try again,” said Chris Broderson, managing director at EisnerAmper.

Should approval for such a product come to fruition, crypto would be further legitimized as an asset class, he added, “as investors are investing in the asset, not the underlying technology. This could also pave the path for other cryptocurrencies, or baskets of cryptocurrencies, to be packaged into an ETF.”