Bitcoin
Bitcoin eclipsed by Ether and Solana in crypto bets riding on ETF hype
(Bloomberg) — Bitcoin’s performance is starting to be overshadowed by Ether and Solana tokens as the excitement around U.S. cryptocurrency exchange-traded funds shifts to the two smaller digital assets.
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Solana saw its biggest rise in more than a month on Thursday after fund manager VanEck filed to start an ETF for the token. Ether has surpassed Bitcoin this year as final approvals for funds focused on the currency approach.
By contrast, Bitcoin rose to prominence in early 2024 when the first U.S. spot ETFs for the largest digital asset launched. Products from firms including BlackRock Inc. and Fidelity Investments attracted huge inflows, pushing Bitcoin to a record high of $73,798 in March, but demand and price have since cooled.
The US Securities and Exchange Commission last month approved stock exchange proposals to list spot-Ether ETFs. Some reports have said final approvals for launches could come as early as next week.
Ether ETF Outlook
Analysts have begun to push back on tempered expectations about demand for ETFs holding the No. 2 token Ether, which is lesser-known than Bitcoin. The U.S. vehicles could attract $5 billion in net inflows in the first five months, according to Galaxy Digital Holdings LP and Fundstrat Global Advisors LLC.
“Sentiment surrounding the launch of the Ether ETF is very bearish,” Fundstrat head of digital asset strategy Sean Farrell wrote in a note. He predicts ETFs will get a boost from hedge funds pursuing so-called basis trading, which seeks to exploit discrepancies between the spot market and the futures market.
Ether is up 49% since the turn of the year, outpacing Bitcoin’s 45% advance. Solana — also known as SOL — had already surged 754% in 12 months prior to Thursday’s gains and is ranked as the No. 5 digital asset.
US Bitcoin ETFs have garnered $14.5 billion in net inflows since listing in January. Strategists at JPMorgan Chase & Co. estimated that future Ether portfolios will attract a “modest” $1 billion to $3 billion in net inflows during the rest of 2024.
SEC Position
The SEC surprisingly moved to approve Ether ETFs in the offing after reluctantly allowing Bitcoin funds following a court reversal in 2023.
While Bitcoin is viewed as a commodity, the agency under Chairman Gary Gensler argues that most other tokens are unregistered securities that should be subject to its oversight. Gensler has been ambiguous about whether Ether is a security.
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But Solana is one of more than a dozen coins that the SEC has highlighted in various court filings as unregistered securities. This raises questions about whether the regulator would allow Solana ETFs. A request like VanEck’s does not mean the SEC will give approval for the product launch.
Bitcoin fell about 1% to trade around $60,850 at 11:27 a.m. Friday in New York. Ether dropped to $3,400 and Solana fell 5% to $142.
–With assistance from Suvashree Ghosh.
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