Spot Ethereum ETF Approval Predicted to Drive 60% Price Surge

The price of Ethereum could see a significant rally of up to 60% following the potential approval of spot Ethereum exchange-traded funds (ETFs) in the United States. QCP Capital, a Singapore-based firm, has predicted this surge by drawing parallels to the market reaction seen earlier this year with the approval of spot Bitcoin ETFs.

In January, the approval of spot Bitcoin ETFs triggered a substantial price surge for Bitcoin. The cryptocurrency soared from $42,000 to over $73,000 within two weeks of the ETFs beginning to trade. QCP Capital noted that the current implied volatility for Ether is above 100%, indicating strong market expectations for substantial price movements.

Moreover, the firm highlighted that VanEck’s ETF had been listed by the Depository Trust & Clearing Corporation (DTCC). This listing suggests a high likelihood of approval for spot Ether ETFs, with trading possibly commencing as soon as next week. This development has generated significant anticipation in the market.

Increased Buying Activity and Record High Futures Open Interest

CryptoQuant, an on-chain analytics firm, reported increased buying activity on both centralized and blockchain-based crypto exchanges. On Tuesday, holders purchased over 100,000 ETH in spot markets, marking the highest daily level since September 2023. This surge in buying activity coincided with reports of a favorable decision regarding spot Ether ETFs, leading some analysts to raise the odds of approval from 25% to over 75%.

Additionally, open interest in Ether-tracked futures reached a record high of $14 billion. This amount accounts for 67% of Bitcoin’s open interest as of Wednesday. Traders appear to be increasing their exposure to ETH relative to Bitcoin. The buying activity from ETH permanent holders on that day was the largest seen in 2024 so far.

Regulatory Concerns and Potential Market Volatility

However, QCP Capital’s analysts cautioned that a significant price correction could occur if the ETF application were to be denied. This reminder highlights the potential market volatility and uncertainty surrounding the approval decision.

Six issuers, including BlackRock, recently filed updated copies of their Ether ETF proposals before the decision. These proposals removed plans to stake the token, suggesting that staking activities may have posed regulatory obstacles.

As per data from popular staking service Lido, the annualized yields on Ether staking were nearly 3%. Moreover, Fidelity recently made an amended S-1 application to the SEC for its spot Ether ETF. The updated application specifies that the underlying Ether tokens of the ETF will not be staked. This change aligns with the regulatory concerns addressed by other issuers.