Ethereum ETF Approval Success! Is Now a Good Time to Invest in Ethereum?

Ruby Layram 28th May 2024 No Comments

Reading Time: 5 minutes

On the 23rd of May, an Ethereum ETF received approval from the SEC. This was a pretty big deal in the crypto space and lead many investors to wonder whether now is a good time to invest in Ethereum. 

The Ethereum ETF means that Ethereum assets can now be traded on stock exchanges. This makes Ethereum more accessible which could have a positive impact on the number of people who buy it. 

When more people buy, the price tends to go up!

In this post, we will explore whether or not Ethereum is a good investment to consider right now. 

Although the approval of the ETF was great news for the crypto, there are also some potential risks to consider before you make any decisions. 

Let’s dive in and take a look at whether Ethereum is worth your attention in 2024!

If you’re sitting there scratching your head, don’t worry! We will also explain what an Ethereum ETF is and why the recent approval was important.

• What is an Ethereum ETF?
• How might the approval of an Ethereum ETF affect the price of Ether?
• Is now a good time to invest in Ethereum?

What is an Ethereum ETF?

An Ethereum ETF is a fund that tracks the performance of Ethereum. Just like other exchange-traded products, Ethereum ETFs allow you to gain exposure to Ethereum without owning the underlying asset. 

Recently, the SEC approved Ethereum ETFs offered by BlackRock, VanEck, Fidelity, Grayscale, Bitwise, Arc, Invesco Galaxy, and Franklin Templeton. 

This means that investors will be able to invest in Ethereum through these brokerages via funds that track the underlying price. 

But, what is Ethereum?

It’s all very well explaining the ins and outs of an Ethereum ETF however, that won’t get you anywhere if you don’t understand Ethereum! 

For those of you who don’t know, Ethereum is a cryptocurrency. More importantly, it is the second-largest cryptocurrency by market cap (after Bitcoin). 

The token itself is actually called ‘Ether’ and ‘Ethereum’ is the blockchain network that it is built on. 

Ethereum was created as a sustainable alternative to Bitcoin. It is much less energy-intensive, faster, and cheaper to run!

Due to it’s high speeds and scalability, Ethereum is used to build a LOT of applications in the web3 space. So, it’s pretty important!

Also see: What is Bitcoin and other cryptocurrencies?

How might the approval of an Ethereum ETF affect the price of Ether?

Crypto analysts are very optimistic about the impact that the ETF will have on the price of Ethereum. In fact, the CEO of Jumper.Exchange recently revealed that the approval could lead to a price rally of up to 60%!

The main reason that the launch of an Ethereum ETF will have such a positive impact on the price of Ether is that it will make Ethereum more accessible. 

Furthermore, the approval of the ETF will generate positive market sentiment, which is never a bad thing!

Essentially, Ethereum ETFs will encourage more investors to add Ethereum assets to their portfolios which could put upward pressure on the price. 

Although the ETF will not affect the price of Ethereum directly. There will be an increased purchasing of Ethereum by the ETFs which will affect the demand for the crypto.

The bulk of the rally is expected to occur shortly after the first Ethereum ETF is launched for trading. But, the event could also cause long-term growth for the crypto.

Is now a good time to invest in Ethereum?

The approval of the Ethereum ETF caused a surge of optimism around Ethereum. But, is it really a good time to invest?

Past performance of crypto ETFs

Ethereum is not the first cryptocurrency to bag itself an ETF. Bitcoin did the same thing in January. 

One good way to understand how Ethereum might respond to the ETF is to look at Bitcoin’s performance. 

To everyone’s surprise, the price of Bitcoin dropped after the initial ETF announcement in January. This was due to confusion, regulatory warnings, and investors taking short-term profits. 

However, it didn’t take long for the coin to experience a rally just weeks later. The initial drop was spurred by early investors bagging their profits and it took time for the effects of the ETF to kick in. 

It is also worth mentioning that some of the rally could have been due to the recent halving event. There is no such event in sight for Ethereum which means that it might not experience the same bullish gains as Bitcoin. 

As for the Bitcoin ETFs themselves, they were relatively popular amongst investors. In particular, the iShares Bitcoin Trust managed to hit $10 billion is assets in just 2 months! 

The popularity of crypto ETFs is likely to increase with the growing adoption of cryptocurrency. The assets are framed as the ‘beginner-friendly’ way to get into crypto.

Ethereum ETFs have the potential to be more appealing than Bitcoin ETFs due to the impact that Bitcoin mining has on the environment.

Ethereum price predictions 

The cryptocurrency market attracts a lot of analysts who regularly share their price forecasts and predictions online. These can be a good way to understand what other people think of crypto. 

According to a price prediction published by Forbes, Ethereum has the potential to perform well this year. The blockchain network will undergo several major upgrades that will increase efficiency and make the network more attractive.

The price of Ethereum could also be influenced by macro-economic events (a fancy word for ‘large scale events’) such as the wider adoption of cryptocurrency, which seems to be growing each year!

As more people invest in crypto, the price of Ether is likely to move upwards. This is because it is the second-largest crypto by market cap and one of the most attractive options for investors.

Growing rates of adoption will also increase the demand for the Ethereum blockchain technology, which is used to power a significant number of applications and crypto products.

In a nutshell

Wow, isn’t that a lot of information to take in? 

In a nutshell, I believe that now could be a good time to consider investing in Ethereum (and crypto in general).

This is because:

• The approval of Ethereum ETFs will attract new investors.
• Ethereum is due to undergo a major upgrade later this year which will make the technology more attractive.
• Ethereum will benefit from the wider adoption of cryptocurrency. 

However, it is also really important to be aware of the risks that are involved in buying cryptocurrency.

The price of crypto tokens can be highly volatile which means that the price can experience large movements in a short period of time. This makes it difficult to accurately predict future performance. 

Investing in Ethereum also involves using exchanges that may not be regulated to the same extent that stock exchanges are. Try to stick to reputable platforms that have positive reviews and follow strict security measures. 

Although many people believe that the future of Ethereum is positive, there is no guarantee that the value of your investment will go up. The price of Ethereum could drop if investor sentiment turns negative and demand takes a hit.

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MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.

Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply. Don’t invest in cryptocurrency unless you’re prepared to lose all the money you invest. Cryptocurrency is a high-risk investment, and you should not expect to be protected if something goes wrong.