What are the possible investment strategies after ETH spot approval?

What are the possible investment strategies after ETH spot approval?

That is a good question. The investment strategy after ETH spot approval may depend on several factors, such as the market reaction, the regulatory environment, the competitive landscape, and the innovation potential of Ethereum.

One possible scenario is that the approval of spot-based ETH ETFs will boost the demand and price of Ethereum, as more investors will have access to the cryptocurrency through a regulated and mainstream investment vehicle.

This could also increase the adoption and development of decentralised applications (DApps) and smart contracts on the Ethereum network, as well as upgrades, which aim to improve the scalability, security, and efficiency of the platform.

In this case, the investment strategy could be to buy and hold spot-based ETH ETFs, such as the Fidelity Ethereum Trust, the WisdomTree Ethereum Trust, or the BlackRock Ethereum Trust, which are some of the applications pending with the SEC. These ETFs would offer a more accurate and transparent representation of the underlying asset, as well as lower fees and risks than futures-based ETH ETFs.

Alternatively, investors could also buy and hold spot ETH directly, either through a crypto exchange or a wallet, if they are comfortable with the volatility, security, and custody issues of holding and storing Ethereum directly.

Another possible scenario is that the approval of spot-based ETH ETFs will trigger a sell-off and price correction of Ethereum, as some investors will take profits after the anticipation and speculation of ETH spot approval.

This could also expose the Ethereum network to more regulatory scrutiny and competition from other blockchain platforms, such as Cardano, Solana, or Polkadot, which claim to offer faster, cheaper, and more scalable solutions than Ethereum.

In this case, the investment strategy could be to sell short spot-based ETH ETFs. These ETFs would track the price of Ethereum by holding the actual cryptocurrency in their reserves rather than futures contracts or other derivatives.

Alternatively, investors could also sell and short spot ETH directly, either through a crypto exchange or a wallet, if they are comfortable with the volatility, security, and custody issues of holding and storing Ethereum directly.

Of course, these are just two hypothetical scenarios, and the actual outcome of the spot ETH ETF approval may differ depending on various factors. Therefore, investors should be prepared for various scenarios and adopt the appropriate strategies according to their risk appetite, time horizon, and market outlook.

Whether one is bullish or bearish on Ethereum, there are multiple ways to invest in the cryptocurrency after the spot ETF approval and potentially profit from the market movements of ETH spot approval.

The market reaction and implication of spot BTC ETF approval and spot ETH ETF approval can be compared and contrasted, as both are major events that could affect the price, liquidity, and adoption of the two largest cryptocurrencies by market capitalisation. The market reaction and implication of spot BTC ETF approval and spot ETH ETF approval could be similar. You take reference from NewsQuakes™ at Cointelegraph Pro and draw similarities.

The approval of spot ETH ETFs could boost the demand and supply of ETH, as more investors would buy ETH through the ETFs, and more ETH would be locked up in the ETF vaults. This could create a positive feedback loop that drives the price of ETH higher, as well as increase network security and decentralisation.

Moreover, the approval of spot ETH ETFs could enhance the credibility and legitimacy of ETH as a mainstream asset class and attract more innovation and development in the ETH ecosystem, especially in the areas of decentralised finance (DeFi) and non-fungible tokens (NFTs).

We encourage readers to conduct their own due diligence (DYOR) and to avoid being influenced by fear of missing out (FOMO) when investing in cryptocurrencies. Keep in mind cryptocurrencies are highly unstable and regarded as hazardous investments. This article is not intended to provide investment guidance and is only for informational purposes.

You have now till March to do your homework and plan your playbook.

 

Source: https://e27.co/what-are-the-possible-investment-strategies-after-eth-spot-approval-20240223/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Bullish investment strategies before spot ETH ETF approval

Bullish investment strategies before spot ETH ETF approval

There are several reasons to be optimistic about the approval of spot Ether exchange-traded funds (ETFs) in the near future. First, the United States Securities and Exchange Commission has already shown a more favorable attitude toward cryptocurrencies in general, as evidenced by its approval of 11 spot Bitcoin ETFs in January 2024. This was a historic milestone for the crypto industry, as it marked the first time the SEC allowed investors to access the largest cryptocurrency through a regulated and mainstream investment vehicle.

Second, Ether has a strong case for being classified as a commodity rather than a security by the SEC. This is a crucial distinction, as commodities are subject to less stringent regulations than securities and are, therefore, more likely to be approved for ETFs.

Ether is widely regarded as a commodity by many experts and authorities, including the U.S. Commodity Futures Trading Commission, the Financial Conduct Authority in the United Kingdom, and Bloomberg’s ETF analysts. The Ethereum blockchain is also the backbone of the decentralized finance and nonfungible token sectors, which are booming with innovation and adoption, and demonstrate the utility and value of the network.

Third, there is a strong demand and interest for spot ETH ETFs from both retail and institutional investors. According to a recent survey by Bitwise Asset Management, 98% of financial advisers who currently have an allocation to crypto in clients’ accounts intend to maintain or increase their exposure in 2024, which also favors ETH.

Chris Kuiper, director of research at Fidelity, recently shared his insights on why Ether could be a more appealing investment option for institutional investors than Bitcoin. He highlighted that comprehending Bitcoin as an investment requires delving into intricate topics such as politics, philosophy, game theory and economics. In contrast, Ether provides a more straightforward perspective, emphasizing basic metrics and cash flow data. Kuiper believes presenting these metrics to institutional investors would make ETH appear more like a conventional financial instrument, making it easier for them to relate to the asset.

In addition, there are several applications for spot ETH ETFs pending with the SEC, such as the Fidelity Ethereum Fund, the WisdomTree Ethereum Trust and BlackRock’s iShares Ethereum Trust. These are some of the world’s most reputable and influential asset managers, and their involvement could sway the SEC’s decision in favor of spot ETH ETFs.

Given the positive outlook for spot ETH ETFs, how should investors prepare for the potential approval? There is no definitive answer, as different investors have different risk appetites, time horizons and market outlooks. However, here are some possible strategies to consider, depending on whether one is bullish or bearish on Ether.

For investors who are bullish and optimistic about the approval of spot ETH ETFs, there are several ways to benefit from the anticipation and speculation of an approval, such as:

  • Buying spot ETH: The simplest, most direct way to gain exposure to the price appreciation of Ether is to buy and hold the spot ETH, either through a crypto exchange or a wallet. However, this also involves the highest risk and cost, as the investor has to deal with the volatility, security, and custody issues of holding and storing Ether directly.
  • Buying futures ETH ETFs: Another way to gain exposure to the price appreciation of Ether is to buy and hold futures-based ETH ETFs, such as the VanEck Ethereum Strategy ETF or the ProShares Ether Strategy ETF. These ETFs track the price of Ether by holding futures contracts that promise to deliver ETH at a future date and price. However, this also involves some risk and cost, as the investor has to deal with the contango, rollover, and tracking error issues of holding and trading futures contracts.
  • Buying call options on ETH or ETH ETFs: A more sophisticated, leveraged way to gain exposure to the price appreciation of Ether is to buy call options on ETH or ETH ETFs, such as CME ETH options. These options give the investor the right, but not the obligation, to buy ETH or ETH ETFs at a predetermined price and date. However, this also involves the most risk and cost, as the investor has to pay a premium for the options, and the options could expire worthless if the price of Ether or the ETH ETF does not exceed the strike price by the expiration date.
  • Arbitraging between different ETH products: A more complex, arbitrage-based way to gain exposure to the price appreciation of Ether is to exploit the price differences between different ETH products, such as spot ETH, futures-based ETH ETFs, spot ETH ETFs (if available in other jurisdictions), and ETH derivatives. However, this also involves the most skill and capital, as the investor has to identify and execute the arbitrage opportunities, and hedge against the market and operational risks.

Ethereum is one of the most innovative, influential platforms in the crypto space, and the approval of spot ETH ETFs could be a game-changer for the industry. However, an approval is not guaranteed, and the timing is uncertain. Therefore, investors should be prepared for various scenarios and adopt the appropriate strategies according to their risk appetite, time horizon and market outlook. To aid in their strategies, investors may consider using a powerful trading dashboard such as Cointelegraph Markets Pro.

Whether one is bullish or bearish on Ether, there are multiple ways to invest in the cryptocurrency before a potential spot ETH ETF approval, and potentially profit from the anticipation and speculation of such an approval. But remember, this is not financial advice.

 

Source: https://cointelegraph.com/news/bullish-investment-strategies-before-spot-eth-etf-approval

FAQ

What factors make the approval of spot Ether exchange-traded funds (ETFs) more likely in the near future?

According to Anndy Lian, the approval of spot Ether ETFs is increasingly probable due to the SEC's favorable stance on cryptocurrencies, demonstrated by the approval of 11 spot Bitcoin ETFs in January 2024. Additionally, Ether's potential classification as a commodity, rather than a security, aligns with less stringent regulations, making it more suitable for ETF approval. The strong demand from both retail and institutional investors further supports this optimistic outlook.

How can investors prepare for the potential approval of spot Ether ETFs?

In the article, Anndy Lian mentioned that investors with varying risk appetites, time horizons, and market outlooks have different strategies to consider. For those bullish on Ether, direct purchase of spot ETH, investment in futures-based ETH ETFs, buying call options, and arbitraging between different ETH products are potential approaches. Each strategy comes with its own set of risks and costs, necessitating careful consideration based on individual preferences and market expectations.

What makes Ethereum an appealing investment option for institutional investors, according to Chris Kuiper of Fidelity?

Chris Kuiper highlights Ethereum's appeal to institutional investors, emphasizing its straightforward perspective compared to Bitcoin. While understanding Bitcoin requires delving into intricate topics such as politics, philosophy, game theory, and economics, Ethereum provides a more conventional financial instrument view. Kuiper suggests that presenting Ethereum's basic metrics and cash flow data makes it more relatable to institutional investors, potentially positioning it as a more attractive investment option than Bitcoin.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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ETH to BTC prediction: Will post-Merge Ethereum rise to challenge Bitcoin domination?

ETH to BTC prediction: Will post-Merge Ethereum rise to challenge Bitcoin domination?

Bitcoin (BTC), the crypto market pioneer, is, by market capitalisation, twice the size of ethereum (ETH), the second largest coin. Will ETH eclipse BTH following successful completion of The Merge that saw it switch to the proof-of-stake (PoS) consensus mechanism?

Here we take a look at the ETH to BTC exchange rate, and what factors are shaping ETH/BTC in 2022 and beyond.

What is ETH/BTC?

ETH/BTC represents the exchange rate between ether, the Ethereum blockchain’s native coin, and bitcoin, the native coin on the Bitcoin Network.

ETH/BTC represents how many bitcoins can be bought for one ether, with the rise in ETH/BTC signifying either a rise in ETH or fall in BTC, and vice-versa.

BTC was meant to be “a purely peer-to-peer version of electronic cash”. However, over the years the cryptocurrency has also become a store of value and a comparison to gold as a hedge against rising inflation.

Bitcoin mining relies on a blockchain that connects all public transactions. Using a proof-of-work (PoW) consensus, BTC miners compete against one another to solve mathematical equations and confirm the legitimacy of transactions. They are rewarded in BTC tokens.

In order to reduce the rate at which new BTCs are given as rewards, the cryptocurrency was designed to undergo halving events roughly every four years. A halving reduces the number of bitcoins released into circulation by half, limiting supply.

Ethereum, a programmable network for building decentralised applications (dApps), was launched in 2015, and was inspired by bitcoin’s limitations.

“While Bitcoin is only a payment network, Ethereum is more like a marketplace of financial services, games, social networks and other apps that respect your privacy and cannot censor you,” Ethereum’s website says.

Another key element of Ethereum is the blockchain’s ability to run smart contracts – computer programmes on the blockchain that allow for the creation and smooth running of dApps.

Just like BTC, ETH initially used a PoW mechanism, but since 15 September 2022 relies on PoS. The change became known as ‘The Merge’, and was designed to reduce Ethereum’s energy consumption by around 99.95%.

The Merge is one of a series of upgrades. In a July presentation, the platform’s co-founder, Vitalik Bouterin, named the following development stages, but did not specify when they will happen:

  • The Surge – the addition of Ethereum sharding, which will lower the cost of bundle transactions and make operating easier.
  • The Verge – users will be able to become validators without having to store large amounts of data.
  • The Purge – will simplify the Ethereum protocol and cut down on the amount of space the blockchain uses.
  • The Splurge – this upgrade includes “all of the other fun stuff”.

These updates also have potential to affect the ETH price  shaping the ETH to BTC exchange rate.

ETH to BTC historical rate chart

The ETH to BTC exchange rate surged by 2,518% in the first two years after the pair started trading, from 0.005767BTC in August 2015 to the all-time high of 0.151BTC in June 2017, signifying the quicker rise in ether’s price.

However, this peak in the ETH to BTC price chart did not last long. The exchange rate fell to 0.02427BTC in December 2017 – down 83.9% since the June peak.ETH to BTC exchange rate, 2015 - 2022

The ETH value reached $1,396.42 in January 2018, and the ETH to BTC rate jumped to 0.09724 BTC.

ETH to USD exchange rate, 2015 - 2022

ETH managed to uphold its positive trend against BTC for the next three weeks as the price chart gained 16% more, peaking at 0.1131BTC on 1 February 2018.

ETH to BTC performed fairly well for the duration of 2021, peaking in mid-May at 0.08178BTC, when the ETH price reached $4,168.7 and BTC was trading at $50,000.

The ETH/BTC pairing was not hugely affected when the BTC value reached its all-time high of $66,971.83 in November 2021, It did peak in December 2021 at 0.0879BTC after briefly falling to 0.06034BTC on 19 October 2021.

BTC to USD exchange rate, 2015 - 2022

Following the collapse of the TerraUSD (UST) stablecoin and its sister token LUNA and the wider crypto crash that followed, the ETH to BTC exchange rate fell by nearly 30% from 0.07554BTC in May 2022 to 0.05373BTC in July, indicating a faster decline of ETH price.

ETH’s price dipped to as low as $993 in June, with BTC slumping to $19,017 amid the bearish sentiment in the cryptocurrency world sparked by LUNA collapse and tightening monetary policy.

Ether rose  to 0.0846BTC in September 2022 in anticipation of The Merge. The current exchange rate stood at 0.07088 BTC, as of 20 September.

Is The Merge driving ETH/BTC?

On 15 September Ethereum successfully upgraded its system from PoW to PoS after a six-year build-up. However, the ETH price did not rally as much as investors were anticipating.

Anndy Lian, chief digital advisor at the Mongolian Productivity Organisation and author of NFT: From Zero to Hero. noted that right after The Merge, the price swung above $1,640 and fell shortly after:

“This is very much expected. There was much influx of ETH into various exchanges since the 12th and then building up to around 1.8 million ETH before the completion. In this case, I see that investors could be planning to sell off before the price fell.”

Lars Seier Christensen, chairman of the Concordium Foundation and founder of Saxo Bank, said that the Ethereum community anticipated a “much more positive reaction to the successful Merge”. He added that the recent rally was what in TradFi we call “buy the rumour, sell the fact” and that whoever saw The Merge as upbeat news had already bought ETH.

“Merge is really a non-event. It changes nothing in terms of scalability or fees, and actually antagonises a number of long-term Ethereum supporters – the miners,” he added.

Eugene Zomchak, CoinLoan’s head of product, told Capital.com that the value of ETH to BTC is likely affected by other microeconomic factors such as the cryptowinter and the Fed’s policy tightening than The Merge, noting:

“There are some positive forecasts coming in from enthusiasts who note that the Merge was a landmark event and the price of ether could surge by two, three and even five times.”

Since The Merge, the BTC price has been fluctuating between $19,000 and $20,000. ETH reached $1,469.74 on 17 September before falling to around $1,300, as of 20 September.

Lian stressed that it is important investors remind themselves that the effects of The Merge, possibly including the ETH to BTC price, will only be felt in the long-term:

“The gas fees will remain the same, and other scalability issues are still unsolved. The community at large must wait for Surge, Verge, Purge, and Splurge improvements to see a reduction in transaction costs and boost scalability significantly.”

Concordium Foundation’s Christensen also noted that the current market environment is challenging:

“The correlation to broader asset markets is very clear, and if stocks don’t recover, this will add to negative sentiment. If Ethereum goes decisively below 1,400, I think we could see a significant sell-off.”

Christensen added that the next Ethereum upgrades will be in focus:

“The most important thing is increased scalability, which will reduce fees. Until that happens, Ethereum is in effect not much use, and entirely reliant on Layer 2 solutions that provide much less security than Ethereum itself.
“Considering how difficult the Merge has been to execute, with years of delay, my personal belief that Ethereum can deliver the next stages in a speedy fashion is limited. Ethereum has one advantage and one advantage only: a very loyal ecosystem that will go through the most extraordinary and irrational hurdles, just to stay loyal. I wonder how long that will last.”

ETH/BTC exchange rate forecasts

Based on its analysis of past price performance as of 20 September, algorithm-based forecasting service Wallet Investor predicted that ETH/USD could trade at $2,391.383 in 2023 and reach $7,135.056 by 2027.

In terms of bitcoin prediction, the site saw BTC/USD trade at $33,668.92 in 2023 and reach $79,969.28 by 2027.

While Wallet Investor did not provide a direct ETH/BTC exchange rate forecast, the data suggests that they expected the rate to be 0.335BTC in 2023 and 0.421BTC in 2027.

DigitalCoinPrice supported a positive ETH/USD forecast, as of 20 September, and expected the coin to grow to $1,832.85 by the end of 2022, $3,032.72 in 2023 and $5,417.40 in 2025. Its long-term prediction saw the token surge past $18,000 in 2030.

The site also gave an upbeat BTC/USD forecast, expecting the coin to grow to $27,580.79 by the end of 2022, $41,874.03 in 2023 and $76,453.11 by 2025, passing $264,000 in 2030.

DigitalCoinPrice expected the rate to be 0.0665BTC by the end of 2022, 0.0724BTC in 2023, 0.708BTC  by 2025 and 0.068BTC by 2030.

Note that forecasts and analysts’ expectations shouldn’t be used as a substitute for your own research. Always conduct your own due diligence and rely on your own projections. And never trade money you cannot afford to lose.

 

Source: https://capital.com/eth-btc-prediction-ethereum-bitcoin-merge-domination

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

j j j