Speculation on ETF drives remarkable surge in Ethereum Classic
Ethereum Classic (ETC) saw a significant surge of 37% in the past week, with many attributing this increase to investors anticipating the approval of an Ethereum (ETH) exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC). While the SEC recently approved spot Bitcoin ETFs, SEC Chair Gary Gensler has cautioned against assuming that this means the agency will treat ETH in the same manner.
Despite this caution, Ethereum Classic experienced a surge of over 35% this week, with its current price at $26.65 and a market cap of $3.8 billion, according to CoinGecko. This upward movement is believed to be driven by increased trading volumes and the excitement surrounding the potential approval of an Ethereum ETF.
The sudden rise of Ethereum Classic seems somewhat mysterious, especially considering the timing. Some skeptics argue that the surge is in anticipation of an upcoming hard fork scheduled for later this month. This hard fork is expected to align the network’s EVM with Ethereum’s, potentially attracting projects to collaborate with Ethereum Classic.
Furthermore, the network’s hashrate reached all-time highs after Ethereum transitioned to proof-of-stake in late 2022. Former Ethereum miners redirected their GPU mining rigs to Ethereum Classic, seeking an alternative source of revenue and thereby contributing to the network’s increased hashrate.
Despite Ethereum Classic’s relatively stable post-Merge hashrate, the network only registers around 30,000 transactions per day, similar to Bitcoin Cash. In contrast, Ethereum’s hashrate before the Merge was more than 15 times higher than Ethereum Classic’s current hashrate.
In contrast, ETHPoW, the hard fork of Ethereum that was initiated around the Merge to compete with Ethereum Classic, currently operates with approximately one-tenth of Ethereum Classic’s hashrate.
Market reactions seemed to have anticipated the SEC’s unofficial announcement, leading to premature selling of the news while simultaneously speculating on potential Ethereum ETFs. Larry Fink, CEO of BlackRock, has also expressed support for the idea of introducing an Ethereum-based ETF following the launch of the highly anticipated Bitcoin ETF.
The approval of spot Bitcoin ETFs allows ordinary investors to access the world’s largest cryptocurrency without direct purchase. This decision could have implications for the approval of spot Ether ETFs in the future. It may also pave the way for Bitcoin to become a possible investment in 401(k)s, IRAs, and pension plans, promoting mainstream acceptance.
Since the announcement, Bitcoin’s price has experienced significant volatility, reaching its highest level in nearly two years at over $47,000. Major asset managers like BlackRock expressing interest in Bitcoin ETFs have encouraged other asset managers to follow suit.
The SEC’s approval of Bitcoin ETFs includes several companies such as Ark Invest, 21 Shares, Bitwise, BlackRock, Fidelity, Franklin Templeton, Grayscale, Hashdex, Invesco, WisdomTree, Valkyrie, and VanEck. Some of these ETFs have already started trading, with Grayscale, BlackRock, and Fidelity dominating trading volumes.
Looking forward, the SEC is expected to make decisions on spot Ether ETF applications starting in May. BlackRock, Invesco, Ark, VanEck, and Grayscale are among the firms seeking approval.
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