Ethereum ETF Approval Expectations Heat Up: Can ETH Take Over BTC's Bull Run?

Ethereum ETF Approval Expectations Heat Up: Can ETH Take Over BTC's Bull Run?

With Bitcoin breaking the $100,000 mark in 2024, the cryptocurrency market is once again celebrating. However, market attention is rapidly shifting to the next potential catalyst: the U.S. Securities and Exchange Commission's (SEC) progress on approving a spot Ethereum ETF. Recently, multiple industry analysts and regulatory sources have indicated that the SEC's stance on an Ethereum ETF has become more open than before, significantly boosting market expectations for approval. This shift has sparked heated debate among investors: after BTC hits a new all-time high, can ETH take over as the next hotspot for capital chasing?

1. Ethereum ETF: From 'Almost Impossible' to 'Drawing Near'

Looking back at 2023, the SEC repeatedly delayed or rejected applications for a spot Ethereum ETF, primarily due to concerns over market manipulation risks and whether Ethereum's proof-of-stake (PoS) mechanism constitutes a security. However, entering 2024, the situation has subtly changed. According to sources familiar with the matter, SEC staff have held technical meetings with several applicants (such as BlackRock and Fidelity) to discuss product structure details. Additionally, the Commodity Futures Trading Commission (CFTC) recently explicitly classified Ethereum as a commodity, providing legal reference for the SEC's review.

The market generally believes that if the successful experience of the Bitcoin spot ETF (cumulative net inflows exceeding $10 billion) can be replicated for Ethereum, it will significantly drive institutional capital inflows. According to Bloomberg analysts, an Ethereum ETF could attract approximately $5 to $10 billion in its first year after approval, equivalent to 3%-5% of Ethereum's current circulating market cap. This expectation is directly reflected in ETH's price action: since March 2024, the ETH/BTC exchange rate has rebounded from around 0.05 to above 0.06, indicating capital rotation from BTC to ETH.

2. BTC vs. ETH: The Logic Behind Divergent Trends

Bitcoin's breakout was primarily driven by the 'digital gold' narrative, expectations of Fed rate cuts, and safe-haven demand amid global geopolitical uncertainty. According to CoinGecko data, BTC rose over 60% in Q1 2024, while ETH gained only about 40% during the same period, showing a clear divergence. Two main reasons underlie this divergence:

• Narrative Differences: BTC is widely seen as a macro hedge tool, while ETH relies more on ecosystem applications and on-chain activity. In early 2024, high transaction fees on the Ethereum mainnet and the early stage of Layer 2 scaling solutions led some capital to shift to competitors like Solana.
• Regulatory Uncertainty: The SEC's unresolved classification of Ethereum as a security has made some institutional investors cautious about ETH. In contrast, BTC's compliance path is clearer.

However, with rising expectations for an Ethereum ETF, this logic is reversing. If the SEC formally approves, ETH will gain the same compliance status as BTC, significantly reducing institutional allocation barriers. Additionally, Ethereum's deflationary mechanism (EIP-1559 burning part of transaction fees) and the upcoming 'Cancun upgrade' to improve network efficiency could attract more long-term holders.

3. Can ETH Take Over? Key Variables and Risks

Despite market optimism, ETH taking over BTC's bull run is not guaranteed. Several variables are worth watching:

• Approval Timeline: According to industry media analysis, the SEC may make a decision by June 2024 at the latest. If it is delayed or rejected again, ETH could face short-term selling pressure.
• Capital Rotation Pace: With BTC at historical highs, some profit-taking capital may rotate to ETH. However, if global liquidity tightens (e.g., unexpected Fed rate hikes), the entire crypto market could correct simultaneously.
• Competitive Landscape: Ethereum faces competition from high-performance blockchains like Solana and Avalanche. According to DeFi Llama data, Ethereum's share of total value locked (TVL) in DeFi has dropped from about 65% in early 2023 to around 55%, indicating market share loss.

From a technical perspective, ETH is currently trading around $3,500, about 30% below its 2021 all-time high of $4,800. If an ETF approval is announced, ETH could quickly challenge the $4,000 level in the short term. However, in the long run, ETH's rise will depend on ecosystem recovery and sustained institutional buying, not just event-driven momentum.

4. Conclusion: Short-Term Optimism, Long-Term Observation Needed

Overall, rising expectations for an Ethereum ETF approval provide a strong catalyst for ETH, giving it the potential to take over BTC's bull run. Especially after BTC's new highs, increased market risk appetite naturally directs capital toward the second-largest crypto asset by market cap. However, investors should be wary of risks such as regulatory reversals and intensified competition. Whether ETH can truly become 'digital oil' and start an independent rally still awaits the SEC's final decision and the actual performance of the Ethereum ecosystem.

Risk Warning: The above content is for reference only and does not constitute investment advice. The cryptocurrency market is highly volatile; please fully understand the risks and make cautious decisions before investing.