Dencun witnesses Ethereum soaring to $3k as investors eagerly await spot ETH ETF

Ethereum’s native token, ETH, surged to $3,000 on February 20th, following a week-long rally fueled by increased investment in various cryptocurrencies in 2024.

This marks the first time since April 2022 that Ethereum has reached this level, reaffirming positive sentiment towards the second-largest cryptocurrency and its blockchain. According to CoinMarketCap, ETH has grown more than 2% in the past 24 hours and over 13% in the last seven days.

With this latest increase, Ethereum now has a market capitalization of over $355 million, accounting for just over 18% of the total cryptocurrency market. Year-to-date, ETH has seen a 30% increase.

The growth of Ethereum has coincided with the rise of Bitcoin and the overall cryptocurrency landscape. Bitcoin has experienced increased demand following the U.S. Securities and Exchange Commission’s (SEC) approval of spot BTC ETFs for trading on national exchanges like NASDAQ and CBOE.

Some analysts believe that spot Bitcoin ETFs have played a significant role in generating interest in the crypto market. TradingView data supports this claim, as the cryptocurrency market cap has expanded by nearly 20% in the first two months of the year.

Issuers are also vying for the same product, with ETH as the underlying asset. Several companies, including ARK 21Shares and Invesco Galaxy, have filed applications to list spot Ethereum ETFs on U.S. exchanges. While these products already exist in the form of futures contracts, which track future Ether prices rather than spot prices, the SEC has historically denied spot-based crypto products due to concerns of market manipulation and fraud.

However, a recent ruling by Judge Neomi Rao in the Grayscale case overturned this stance. Judge Rao criticized the SEC’s decision as “arbitrary and capricious,” stating that the approval and denial of similar products were inadequate according to the law. This has fostered optimism among industry proponents that the same rationale might apply to ETH-based products, although SEC Chair Gary Gensler has expressed differing views. Gensler has yet to definitively determine whether Ethereum is a security, but he maintains that the majority of cryptocurrencies fall under financial regulations.

Analysts predict that there is a 50% chance of Ethereum ETFs tracking spot ETH prices receiving regulatory approval in the second quarter of 2024. The SEC has delayed its decision on approving or denying spot Ethereum ETFs until May, while a technological upgrade known as Dencun continues to generate optimism in the cryptocurrency community. ETH developers plan to deploy Dencun to the mainnet before the end of March.

Dencun introduces proto-danksharding, an update that enhances data availability for layer-2 rollups. This solution will add blobs to on-chain activity and is expected to reduce gas fees, making transactions on Ethereum’s ecosystem easier and more cost-effective.