ETF approval has led to a continuous increase in Ether’s spot trading market share
Crypto News– Ethereum (ETH) has received SEC approval for a spot Ether ETF, providing some much-needed relief for the asset.
Earlier in the year, attention on Ether had waned after initial hopes for an ETF dwindled and the Dencun upgrade went live. Ether was lagging behind Bitcoin, which thrived after its spot ETF launch, and other cryptocurrencies that saw strong rallies in the first few months of the year.
For example, the BTC/ETH ratio, a commonly used measure of performance between Bitcoin and Ether, rose from 16.6 ETH in mid-January to 22.2 ETH by May 17. This indicated that one Bitcoin was worth approximately 5 more Ether compared to the start of the year. However, the ratio fell back below 18 ETH shortly after Ether’s value spiked in anticipation of the ETF approval, bringing the pricing between the two assets back to levels seen earlier in the year.
Similarly, the SOL/ETH ratio has seen significant movement. A year ago, 1 SOL could buy about four times as much Ether as it can now, even with Ethereum’s recent climb.
During this period of slowdown for Ether, its spot trading fell behind Bitcoin. In March, at the peak of the recent crypto rally, the 7-day moving average of Bitcoin’s spot volume reached as high as $29 billion, the highest level since May 2021. For ETH, however, volumes peaked at $12.75 billion, not surpassing the peak reached in May 2022 during the sell-off triggered by the collapse of Terra.
Ether’s spot trading market share is climbing higher post-ETF approval
On May 26, the gap between Bitcoin and Ether trading volumes narrowed significantly, with Bitcoin’s moving average dropping to $12.89 billion and Ether’s reaching $11.26 billion.
In notional terms, the $1.6 billion difference between the two is the closest it has been since January 2020, before the first major bull market, when both assets had relatively low volumes, making the $1.6 billion a more significant disparity back then.
Currently, Ether’s trading volume stands at 87% of Bitcoin’s daily volume, marking its highest relative share ever. The previous peak was 85% in June 2021, during the height of the bull market when trading volumes for both assets were exceptionally high.
The spike in Ether’s volume relative to Bitcoin isn’t surprising, given that Ether-centric news, such as the ETF approval, has driven its value up. However, the fact that this catalyst has pushed Ether’s spot trading market share to levels only seen back in 2021 is quite significant.
FAQs
What is an ETF approval and why is it important for Ether?
ETF approval refers to the authorization by regulatory bodies, such as the SEC, for an exchange-traded fund (ETF) to be listed and traded. This approval is important for Ether because it allows investors to gain exposure to Ether through a regulated financial product, potentially increasing demand and market activity.
How has the ETF approval affected Ether’s spot trading market share?
The ETF approval has led to a significant increase in Ether’s spot trading market share, indicating that more investors are trading Ether directly on exchanges.
What is spot trading?
Spot trading involves buying and selling financial instruments, such as cryptocurrencies, for immediate delivery. It contrasts with futures or options trading, where the transaction is set to occur at a later date.
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