Spot Ethereum ETF Approval Could Drive Strong Narrative, says Kaiko Research
An analysis conducted by Kaiko Research suggests that the potential approval of a spot-based Ethereum (ETH) exchange-traded fund (ETF) could become the crypto asset’s most compelling narrative. The analysis draws parallels to Bitcoin’s performance prior to the approval of a spot Bitcoin ETF. According to Kaiko’s data, Bitcoin’s return of 100% in the year leading up to the ETF approval outperformed Ethereum’s 60%. However, since the SEC’s approval of 11 spot Bitcoin ETFs, Bitcoin’s price has declined while Ethereum’s has rallied. This trend suggests that investors may be anticipating the approval of Ethereum-based ETFs. The analysis also highlights Ethereum’s outperformance in comparison to Ethereum beta tokens.
Investors’ Preference Shifts to Ethereum as Ethereum Beta Interest Fades
Kaiko Research’s analysis reveals that post-approval, interest in Ethereum beta tokens has declined while Ethereum itself has remained resilient. The second week of January saw Ethereum spot volume on centralized exchanges reach its highest level since the FTX collapse, with three of the highest spot volume days recorded since the start of 2023. Additionally, Kaiko’s derivatives data indicates that Ethereum’s recent performance is primarily driven by spot volumes rather than perpetual futures. The report suggests that the approval of a spot Ethereum ETF could reignite interest in the crypto asset, but if this scenario doesn’t materialize, new layer twos (L2s) or the success of Eigenn Layer and restaking could serve as catalysts for Ethereum’s next rally.
Hot Take: Ethereum’s Strong Narrative Relies on ETF Approval
The approval of a spot Ethereum ETF by the SEC has the potential to shape Ethereum’s narrative significantly. Similar to Bitcoin’s rally following the approval of a spot Bitcoin ETF, investors are speculating that Ethereum-based ETFs will also gain regulatory approval. The performance of Ethereum post-Bitcoin ETF approval indicates that investors might be betting on the approval of Ethereum-related ETFs. Kaiko Research’s analysis highlights the decline in interest in Ethereum beta tokens, while Ethereum itself continues to rally. This suggests a shift in investor preference towards Ethereum. The approval of a spot Ethereum ETF could bolster Ethereum’s reputation and spark renewed interest, leading to the crypto asset’s next rally.
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