ETH ETF approval and why it's important

Investing Strategy
May 24, 2024

In an unexpected turn, the U.S. Securities and Exchange Commission (SEC) has officially approved an exchange-traded fund (ETF) focused on Ether. This pleasant surprise is another major milestone for the entire crypto world.

If you're scratching your head wondering what on earth that means, don't worry – you're not alone. Let's break it down in simple terms.

What is Ethereum and Ether?

Ethereum is a decentralized blockchain with smart contract functionality. Ether (ETH) is the native cryptocurrency of the platform. Ether is the second biggest cryptocurrency by market cap after Bitcoin.

What is an Ether ETF?

Ether ETF tracks the price of Ether ($ETH), the native cryptocurrency of the Ethereum blockchain. Investors can buy shares in the ETF just as they would buy shares of a company, gaining exposure to Ether's price movements without needing to directly own or manage the cryptocurrency itself. ETFs provide a familiar and regulated investment option for mainstream investors who may be reluctant to dive into the complexities of cryptocurrency exchanges.

What is the impact of ETH ETF approval? Why is it such big news?

The approval of yet another cryptocurrency ETF (after BTC ETF approval in the beginning of 2024) confirms the legitimacy and maturity of the existing market. Growing interest of major players signals increasing confidence among institutional investors who have been sitting on the sidelines due to regulatory uncertainty, which could lead to greater participation and overall growth of the crypto market.

Analysts predict increased price volatility as the approval of the Ether ETF is another clear signal for cryptocurrencies. For example, Standard Chartered predicts that the price of Ether could surge to $8,000 by the end of 2024. Ethereum's market capitalisation is significantly lower than Bitcoin's, which could lead to more significant price movements. The influx of new capital, combined with increased legitimacy, could fuel a significant price rally.

Ethereum is the first smart contract platform to receive ETF approval, which greatly increases the likelihood that other tokens in the Ethereum ecosystem, such as Solana, Avalanche, Aptos, Arbitrum, Optimism and many others may also have their own ETFs, which could significantly affect their price.

You can easily buy Ether with the Change app across Europe. Download the app and start now.