Ethereum Classic (ETC) experienced a 37% increase over the past seven days.
Observers note that the surge is likely due to investors anticipating that the U.S. Securities and Exchange Commission will consider applications for an Ethereum (ETH) exchange-traded fund (ETF). On Jan. 10, the agency approved spot Bitcoin ETFs,
However, SEC Chair Gary Gensler cautioned that the BTC ETF green light should not be interpreted as a signal of the agency’s willingness to give ETH the same treatment.
Still, Ethereum Classic witnessed a surge of over 35% this week. The altcoin is exchanging hands for $26.65 at press time, with a market cap of $3.8 billion, per data from CoinGecko. This upward movement has been credited to heightened trading volumes and the hype surrounding Ethereum ETF approval.
The rapid ascent of Ethereum Classic seems somewhat inexplicable given the timing. Some skeptics argue that ETC’s swift climb is in anticipation of an upcoming hard fork later this month.
This hard fork is speculated to enhance the alignment of the network’s EVM with Ethereum’s, potentially attracting projects to collaborate with the chain.
Adding to the context, the network’s hashrate surged to all-time highs after Ethereum transitioned to proof-of-stake in late 2022. Former Ethereum miners redirected their GPU mining rigs to Ethereum Classic, seeking an alternative revenue stream, thereby contributing to the network’s heightened hashrate.
Despite Ethereum Classic’s post-Merge hash rate remaining relatively stable, the network registers only about 30,000 transactions per day, roughly the baseline for Bitcoin Cash. Nevertheless, Ethereum Classic’s hashrate is less than 15% of what Ethereum recorded just before the Merge.
In contrast, ETHPoW, the hard fork of Ethereum initiated around the Merge to compete with Ethereum Classic, currently operates with approximately one-tenth of the latter’s hashrate.
However, market reactions appeared to anticipate the SEC’s unofficial announcement, selling the news prematurely, while simultaneously speculating on potential Ethereum ETFs.
Larry Fink, the CEO of BlackRock, has also expressed support for the idea of introducing an Ethereum-based ETF, following the launch of the highly anticipated Bitcoin ETF.
Paving the way for ETH approval
A spot Bitcoin ETF enables ordinary investors to tap into the world’s largest cryptocurrency without direct purchase. This milestone decision holds potential implications for the approval of spot Ether ETFs in the future.
The green light for Bitcoin ETFs could position Bitcoin as a possible fixture in 401(k)s, IRAs, and pension plans, fostering mainstream acceptance.
Since the announcement, Bitcoin’s price has experienced immense volatility, and the onset of 2024 witnessed it surpassing $47,000 marking its highest level in nearly two years, according to data from CoinGecko.
Major asset managers like BlackRock expressing interest have spurred other asset managers to follow suit.
The SEC’s approval of Bitcoin ETFs encompasses several companies, including Ark Invest and 21 Shares, Bitwise, BlackRock, Fidelity, Franklin Templeton, Grayscale, Hashdex, Invesco, WisdomTree, Valkyrie, and VanEck. Some of these ETFs commenced trading shortly after approval, with Grayscale, BlackRock, and Fidelity dominating trading volumes.
Looking ahead, the SEC is reportedly expected to make decisions on spot Ether ETF applications starting in May. BlackRock, along with Invesco, Ark, VanEck, and Grayscale are among the firms seeking approval.