Bitcoin’s performance is being overshadowed by Ether and Solana as excitement around US cryptocurrency exchange-traded funds shifts to these smaller digital assets.
Solana saw its biggest surge in over a month on Thursday after fund manager VanEck applied to start an ETF for the token. Ether has outperformed Bitcoin this year as final approvals for funds focused on Ether get closer.
Shift in Focus from Bitcoin to Ether and Solana
At the start of 2024, Bitcoin dominated the spotlight when the first US spot ETFs for the largest digital asset were launched. Products from companies like BlackRock Inc. and Fidelity Investments attracted significant inflows, pushing Bitcoin to a record high of $73,798 in March. However, demand and prices have since cooled.
Last month, the US Securities and Exchange Commission approved stock exchange proposals to list spot-Ether ETFs. Some reports suggest that final approvals for these launches could come as soon as next week.
Growing Interest in Ether ETFs and Solana’s Surge
Analysts are challenging the low expectations for demand for ETFs holding Ether, the second-largest cryptocurrency, which is less well-known than Bitcoin. Galaxy Digital Holdings LP and Fundstrat Global Advisors LLC estimate that US Ether ETFs could attract $5 billion in net inflows in the first five months.
“Sentiment around the Ether ETF launch is far too bearish,” wrote Fundstrat’s Head of Digital Asset Strategy Sean Farrell in a note. He predicts that these ETFs will benefit from hedge funds engaging in the basis trade, which exploits price differences between the spot and futures markets.
Ether has risen 51% since the beginning of the year, surpassing Bitcoin’s 45% gain. Solana, also known as SOL, surged 754% over 12 months before Thursday’s gains and now ranks as the fifth-largest digital asset.
US Bitcoin ETFs have drawn $14.5 billion in net inflows since their listing in January. JPMorgan Chase & Co. strategists estimate that upcoming Ether ETFs will attract a “modest” $1 billion to $3 billion in net inflows for the rest of 2024.
SEC’s Stance on Crypto ETFs and Market Reactions
The SEC made a surprising shift towards approving spot-Ether ETFs after initially allowing Bitcoin funds following a court decision reversal in 2023.
While Bitcoin is classified as a commodity, SEC Chair Gary Gensler’s stance is that most other tokens are unregistered securities and should fall under SEC oversight. However, Gensler has not definitively stated whether Ether is considered a security.
Solana is among more than a dozen coins targeted by the SEC in lawsuits alleging they are unregistered securities. This casts doubt on whether Solana ETFs will receive approval from the regulator, despite VanEck’s filing.
Bitcoin saw a modest increase of approximately 0.5%, trading around $61,700 as of 12:10 p.m. Friday in Singapore. Ether edged up to $3,453, while Solana experienced a slight dip of 1.5% to $147.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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