According to Kaiko Research, $ETH open interest reached an all-time high of $11 billion following ETF approvals indicating strong capital inflows into the space.
The United States Securities Exchange Commission granted accelerated approval to stock exchanges to list and trade shares of Ether ETFs on May 23 2024.
🇺🇸MILESTONE | United States Securities Regulator Approves Listing of #Ether ETFs on Major Stock Exchanges
According to local reports, the approval of listing on 3 exchanges, #NYSE #NASDAQ, and #CBOE, will see 8 institutional ETF products potentially list their ETF products, but… pic.twitter.com/NVgmQCshL9
— BitKE (@BitcoinKE) May 24, 2024
Open interest is a crucial indicator of market sentiment. A rising open interest suggests a growing market, indicating new money entering the market and potential bullish trends. Conversely, a decreasing open interest may signal waning interest or a potential reversal.
The ETH to BTC ratio, which measures the relative performance of the two assets, also rose from 0.044 to 0.055, though it remains below the highs seen in February 2024.
Market analysts suggest that $ETH, which is up 4.8% in the last 7 days, could experience a significant surge ahead of the ETFs listing on exchanges. According to Kaiko Research, the asset’s value is likely to increase over the long term despite some expected downward pressure on the price of $ETH due to anticipated outflows from the nearly five-year-old Grayscale Ethereum Trust (ETHE).
“Once the ETH ETFs launch, it is reasonable to expect selling pressure on ETH from likely outflows or redemptions due to Grayscale’s ETHE, which has been trading at a discount between 6% and 26% over the past three months,” the firm said.
“Overall, even if inflows disappoint in the short term, the approval has important implications for $ETH as an asset, removing some of the regulatory uncertainty which has weighed on ETH’s performance over the past year.”
Moreover, the decision implies that the SEC recognizes $ETH without staking to be a commodity and not a security as had been suggested.
“With these approvals, the SEC implicitly stated that ETH (without staking) is a commodity rather than a security. This isn’t just about access to ETH, but has significant and likely positive ramifications on how all similar tokens will be regulated in the U.S. with respect to trading, custody, transfer, etc,” said Will Cai, Head of Indices at Kaiko.
REGULATION | Spot Ether ETF Applicants Commit to Not Staking $ETH Ahead of SEC Decision
“Neither the trust, nor the sponsor, nor the custodian, nor any other person associated with the trust will, directly or indirectly, engage in action where any portion of the trust’s ETH… pic.twitter.com/IhaDE04Pf7
— BitKE (@BitcoinKE) May 23, 2024
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