Ethereum ETF Approval Hopes Rise, Bitcoin Consolidates at Highs Awaiting Catalyst

Ethereum ETF Approval Hopes Rise, Bitcoin Consolidates at Highs Awaiting Catalyst

The cryptocurrency market is once again focusing on the U.S. Securities and Exchange Commission's (SEC) progress in approving a spot Ethereum ETF. With multiple applicants engaging more frequently with regulators, market expectations for an Ethereum ETF approval have significantly increased. Meanwhile, Bitcoin, after its historic rally past $100,000 in 2024, is now trading in a high-level consolidation pattern, with the market awaiting a clear catalyst to break the stalemate. This article analyzes the likelihood of an Ethereum ETF approval and its potential impact on Bitcoin's price action from both market news and on-chain data perspectives.

I. Ethereum ETF Approval Expectations: From 'Unlikely' to 'Possible'

Previously, the market widely believed the SEC was cautious toward spot Ethereum ETFs, primarily due to concerns over regulatory classification issues arising from Ethereum's proof-of-stake (PoS) mechanism and market manipulation risks. However, recent developments are changing this outlook. According to sources familiar with the matter, the SEC has held several technical meetings with multiple applicants, including asset management giants like BlackRock and Fidelity, discussing ETF custody, pricing, and disclosure details. This proactive engagement is interpreted as an acceleration of the approval process.

Additionally, recent discussions in the U.S. Congress regarding a regulatory framework for cryptocurrencies have indirectly boosted expectations. Some lawmakers have publicly called on the SEC to provide clearer guidelines for digital asset ETFs, creating policy-level imagination space for an Ethereum ETF. According to Bloomberg Intelligence analysts, the probability of a spot Ethereum ETF being approved by the end of 2025 has risen from below 30% to over 50%.

On-chain data also suggests the market is positioning for potential positive news. Glassnode data shows that the number of long-term Ethereum holders (addresses holding for over a year) has been steadily increasing over the past three months, reaching an all-time high. This is typically seen as a signal of investor confidence in the asset's future value. Meanwhile, Ethereum's exchange net outflow has risen notably recently, indicating investors are moving ETH from exchanges to personal wallets—often interpreted as 'hodling' behavior, possibly in preparation for a price surge following an ETF approval.

II. Bitcoin's High-Level Consolidation: Awaiting the Next Catalyst

After breaking $100,000 in 2024, Bitcoin did not rally straight up as some optimists expected, but instead entered a high-level consolidation range. Technically, Bitcoin price has been oscillating between $100,000 and $120,000, with trading volume gradually shrinking, suggesting a temporary balance between bulls and bears. The market lacks a new narrative to drive a directional breakout.

On one hand, the macro environment provides some support for Bitcoin. The Federal Reserve kept interest rates unchanged at its early 2025 meeting and hinted at possible rate cuts later this year, offering a liquidity-easing outlook for risk assets. According to the Fed's statement, while inflation data has not fully met targets, it shows signs of slowing, reducing concerns about tightening policies. Bitcoin, as 'digital gold,' typically benefits from loose monetary conditions.

On the other hand, Bitcoin's own fundamentals face challenges. On-chain data shows that miner revenue has declined after the halving, prompting some miners to sell inventory to sustain operations. According to CoinMetrics data, miner transfers to exchanges have increased by about 15% over the past two weeks, which could pressure short-term prices. Additionally, Bitcoin's open interest (OI) is at historical highs, but funding rates remain neutral, indicating high leverage in the market but no strong directional bets.

III. Ethereum ETF Approval's Spillover Effect on Bitcoin

The expectation of an Ethereum ETF approval not only directly impacts ETH price but could also have a spillover effect on Bitcoin. Historically, the approval of a Bitcoin ETF triggered a broad rally across the crypto market, and as the second-largest cryptocurrency by market cap, an Ethereum ETF approval could similarly spark an influx of capital.

In terms of correlation, Bitcoin and Ethereum price movements are highly correlated over the long term, but short-term divergences may occur. If an Ethereum ETF is approved, ETH could outperform BTC in the short term, attracting some capital from Bitcoin to Ethereum. However, such divergence is usually temporary. As overall market sentiment improves, Bitcoin, as the 'market bellwether,' eventually follows upward. According to CoinGecko data, in the month following the approval of a Bitcoin ETF in 2023, Bitcoin price rose about 30%, while Ethereum gained over 40% in the same period, but the gap in gains gradually narrowed afterward.

Moreover, an Ethereum ETF approval could further drive institutional capital into the crypto market. Currently, institutional allocation to Bitcoin is relatively mature, but Ethereum's institutionalization remains low. If an ETF is approved, it would provide compliant ETH exposure for traditional capital, enhancing overall market liquidity and depth. This structural change could indirectly benefit Bitcoin, as a more active market environment typically attracts more speculative and allocative capital.

IV. Risks and Uncertainties

Despite rising expectations, the approval of an Ethereum ETF still faces uncertainties. The SEC may impose additional compliance requirements regarding Ethereum's PoS mechanism, such as requiring validators to disclose more information. Additionally, market manipulation risks remain a core concern for regulators. If the SEC ultimately rejects or delays the approval, ETH price could face a correction and drag Bitcoin down.

For Bitcoin, the duration of its high-level consolidation may depend on macroeconomic data and regulatory progress. If Fed rate cut expectations fall through or geopolitical risks escalate, Bitcoin could test lower support levels. Conversely, if an Ethereum ETF is approved or other positive catalysts emerge (such as discussions on a U.S. strategic Bitcoin reserve), Bitcoin may break out of its current range.

Risk Warning

The above content is for reference only and does not constitute investment advice. The cryptocurrency market is highly volatile; investors should fully understand the associated risks and make decisions based on their own risk tolerance. The data and analysis in this article are based on publicly available information and are not guaranteed for accuracy or completeness.