Smart Money Bets on Ether ETF Following Bitcoin's Historic Approval

• Ether Traders Optimistic About Potential Ether ETF Approval
• Potential Influence of Ether ETF on Ethereum Ecosystem
• Significant Gains in Layer 2 Network Tokens
• Approval Process for Spot Ether ETF Initiated
• Impact of an Ether ETF on Ethereum-based Financial Applications
• Potential Reversal of Fortunes for ETH Investors

Ether Traders Optimistic About Potential Ether ETF Approval

Ether traders are eagerly anticipating the approval of spot ether exchange-traded funds (ETFs). This optimism has been ignited by the recent approval of spot bitcoin ETFs. BlackRock has already initiated the process by submitting a prospectus for its iShares Ethereum$2,315 -2.42% Trust, a spot ether ETF, to the Securities and Exchange Commission (SEC).

Potential Influence of Ether ETF on Ethereum Ecosystem

The approval of an ether ETF could stimulate increased investment and interest in projects and layer 2 networks based on Ethereum. This could potentially fuel further innovation and growth within the Ethereum ecosystem. Ether (ETH) traders are also hopeful that Ethereum's native token could be the next to have an ETF, after the historic approval of spot bitcoin (BTC) exchange-traded funds on Wednesday. The price of ETH witnessed a 10% increase in 24 hours following the approval, while BTC saw a 1.3% increase.

Significant Gains in Layer 2 Network Tokens

The approval also resulted in significant gains in the tokens of layer 2 networks, which function as individual blockchains but are ultimately built on Ethereum. Both Arbitrum's ARB and Mantle's MNT experienced gains exceeding 20%. Other Ethereum ecosystem tokens, encompassing meme coins and those that power Ethereum-based applications, rose by an average of 14%, according to tracking by CoinGecko.

Martin Lee, an analyst at Nansen, stated via a Telegram message that the most significant smart money inflows over the past 24 hours were directed towards the Ethereum ecosystem. Nansen defines smart money as wallets that trade or invest in a manner that is considered well-informed or experienced and are typically profitable.

Approval Process for Spot Ether ETF Initiated

The process to approve a spot ether ETF has already begun, with Ark 21Shares and VanEck, sponsors of approved bitcoin ETFs, having filed their paperwork with the SEC back in September. Similarly, BlackRock, the world's largest asset manager and a bitcoin ETF sponsor, filed an S-1 prospectus for its iShares Ethereum Trust in November.

Impact of an Ether ETF on Ethereum-based Financial Applications

Some traders speculate that the approval of an ether ETF could significantly contribute to the growth of Ethereum-based financial applications, which range from on-chain trading and lending to the issuance of real-world assets, or tokenization, on the blockchain.

RJ Ke, a researcher at Ethereum rollup service Taiko, noted that the approval of an ether ETF could further validate Ethereum's position in the mainstream financial world, thereby promoting increased investment and interest in Ethereum-based projects and layer 2 networks. Such anticipation could stimulate additional innovation and growth within the Ethereum ecosystem.

Potential Reversal of Fortunes for ETH Investors

The prospect of Ethereum-based tokens could potentially trigger a significant shift for ETH investors, who underperformed Bitcoin$42,260 -0.64% in 2023. The largest cryptocurrency by market cap, Bitcoin, saw a more than 150% increase last year, while Ether, the second-largest, experienced about a 90% gain.

Lucy Hu, a senior analyst at Metalpha, stated via email that the SEC's approval of Bitcoin ETFs has provided opportunities for other cryptocurrencies. The market is now closely monitoring Ethereum ETF applications. As the deadline for the ETH spot ETF approaches, Hu believes more institutional investors will allocate more ETH to their portfolios this year to capture greater returns.

Edited by Jonathan Stoker