Bitcoin traded higher Thursday 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.
Spot Bitcoin ETFs gained in first day morning trading.
The cryptocurrency was last up more than 6.5% at $48,993.49, according to Coin Metrics. Earlier, it briefly topped the $49,000 level, its highest since December 2021. Meanwhile, the price of ether advanced 6% to $2,626.80, reaching levels not seen since May 2022.
The ETF approval is a watershed moment for the crypto industry, which first sought to launch a bitcoin ETF more than 10 years ago. Optimism had been building since Grayscale’s big legal win against the SEC in August over the regulator’s refusal to let it convert its popular Bitcoin Trust (GBTC) into an ETF. The flagship cryptocurrency’s price has increased 80% since then.
Following the SEC’s decision, bitcoin initially edged lower, as expected by many traders. Although the volume of inflows into the new funds, once they begin trading, remains to be seen, bitcoin ETFs are still widely expected to drive the demand – and ultimately, price – of bitcoin higher.
Mining stocks, which benefit from increases in the bitcoin price and tend to reflect longer-term investor sentiment toward bitcoin, got a big boost. Wall Street favorites Iris Energy and CleanSpark surged 6% and 8%, respectively. Marathon Digital gained 8% and Riot Platforms added 6%.
Ether’s big pop
Ether’s rally propped up other coins in the Ethereum ecosystem. The token tied to Polygon gained 10%, Chainlink advanced 7% and Uniswap rose 9%.
“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.
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,” or blockchain networks, like Solana and Cardano.
Ether lagged bitcoin in 2023, rising just 90% compared to bitcoin’s 157%.