Ethereum (ETH) has seen a notable decline in its value against Bitcoin (BTC) since its transition to a proof-of-stake network in September of 2022, reaching its lowest point against BTC since May of 2021. This decline also clearly coincides with the market's anticipation of a Spot Bitcoin ETF in the United States.
Meanwhile, there's growing speculation about the potential launch of Spot ETFs for other cryptocurrencies, including Ethereum and Ripple's XRP. Steven McClurg of Valkyrie has hinted at the possibility of an Ethereum ETF following a Bitcoin ETF, and there's increasing excitement about a potential XRP ETF, especially after a court ruling classified XRP as a non-security. Reports suggest that financial giants like Blackrock and Grayscale might be involved in launching an XRP ETF as early as April 2024.
Ethereum and XRP ETFs on the Horizon?
The ETH/BTC ratio has hit its lowest point since May 2021, revealing a decline in ETH’s value against BTC. The downward trajectory of the ETH/BTC ratio has been consistent since Ethereum's transition to a proof-of-stake network in September of 2022. This decline is not just a standalone event but coincides with heightened market expectations surrounding the launch of a Spot Bitcoin exchange-traded fund (ETF) in the United States within this week.
Now, the crypto community is abuzz with the possibility of similar ETF offerings for other cryptocurrencies. Steven McClurg of Valkyrie suggested that following a Bitcoin ETF , a spot Ethereum ETF and even an XRP ETF might be on the horizon. While multiple companies have already applied for Spot Ethereum ETFs, the Ripple XRP ETF remains a concept yet to be realized.
A green signal for Bitcoin ETFs could be a game-changer, potentially paving the way for the introduction of an Ethereum ETF . Steven McClurg's speculation about a potential Ethereum ETF is rooted in Ethereum’s position as the second-largest digital currency. The assumption is that Ethereum’s prominence and market influence make it a very strong candidate for an ETF.
Meanwhile, there is also growing excitement about a potential XRP ETF. Although previous attempts at an XRP ETF have resulted in short-lived price swings, McClurg’s recent hint has rekindled the hope within the very loyal XRP community. This is particularly significant considering XRP's lag behind other cryptocurrencies in value. However, the anticipation of a Ripple XRP Spot ETF filing could lead to a dramatic spike in XRP’s price.
A well known figure in the XRP community who goes by the name of “XRP whale,” even suggested that an XRP ETF could launch before the end of 2024. Despite this optimism, there have been no official announcements from potential issuers regarding an XRP ETF.
XRP ETFs as Early as April 2024
Reports suggesting that financial giants BlackRock and Grayscale might be leading the charge in launching an XRP ETF have sparked enthusiasm among XRP fans. This news, revealed in a YouTube video by Crypto influencer Ben Armstrong, also known as BitBoy Crypto, points to a potential application for an XRP ETF as early as April 2024. This timeline intriguingly aligns with the expected conclusion of the long-standing SEC v Ripple lawsuit.
The cryptocurrency community, especially those backing Ripple, have shown a surge of interest in the concept of a spot Bitcoin ETF. This enthusiasm is mirrored in the discussions surrounding an XRP ETF. Advocates for XRP argue that after a court ruling last year, which classified XRP as a non-security, the digital asset is now perfectly positioned for an ETF.
BlackRock, the world's largest asset manager with more than 8.5 trillion in Assets Under Management (AUM), is anticipated to be at the forefront of this initiative. The firm's involvement is especially interesting considering its role in advocating for a Bitcoin ETF. This speculation gained further traction when Grayscale Investments, another major player in the digital asset space, confirmed the re-inclusion of XRP in its Grayscale Digital Large Cap (GDLC) Fund. After rethinking their cautious 2020 stance driven by the SEC's lawsuit against Ripple, the firm has allocated about $9.6 million (2.54% of the GDLC Fund) to XRP.
Despite these optimistic developments, the actual realization of an XRP ETF still remains shrouded in uncertainty and mystery as the crypto market continues to present challenges for the remittance token. XRP, despite being the sixth-largest cryptocurrency by market capitalization, has had difficulty maintaining a consistent upward trajectory. Even after a favorable ruling by Judge Analisa Torres back in July of 2023, XRP's performance has been somewhat underwhelming compared to what people expected from the altcoin.
Ethereum's Decline Against Bitcoin
Although Steven McClurg of Valkyrie believes a Bitcoin ETF approval could have a positive effect on Ethereum, there is no guarantee that this will be the case. In fact, ETH has experienced a huge decline in value compared to BTC since April of 2021, reaching its lowest point against BTC since then. This decline is particularly notable considering the growing interest in Bitcoin ETFs in the United States. Since Sept. 7, ETH has lost 43% of its value against BTC, dropping from 0.08566 BTC to 0.0482 BTC. Although ETH’s value in U.S. dollars has increased by 41% during the same period, this still pales in comparison to BTC’s impressive 81% gain.
The cryptocurrency market has also shown a very clear preference for BTC over the past 14 months, as evidenced by the increase in BTC's dominance. Bitcoin's share of the total market capitalization of the cryptocurrency industry has risen from 39% to around 54%.
It seems like there are two main factors fueling BTC's rise against altcoins like ETH. Firstly, there is a strong anticipation that a Spot Bitcoin ETF might receive approval in the U.S within this week. Secondly, the upcoming "halving" event in April, which will reduce the reward for Bitcoin mining, is also attracting a lot of interest from the crypto community.
In contrast, Ethereum has lost some of its luster after its much-discussed transition to a proof-of-stake blockchain in 2022. Despite the price of Ethereum being 10% higher than last year, the total value locked across all Ethereum protocols is currently lower than it was in April last year. This further proves that investors are currently fully engrossed in watching what happens with Bitcoin ETFs, and nothing much else.
