Ethereum ETF Hopes Rise: Can ETH Follow BTC to Lead a Market Rebound?

Ethereum ETF Expectations Heat Up: Can ETH Follow BTC to Lead a Rebound?

As Bitcoin enters a high-level consolidation phase after breaking the $100,000 mark in 2024, market attention is gradually shifting to Ethereum. Recently, expectations that the U.S. Securities and Exchange Commission (SEC) may approve a spot Ethereum exchange-traded fund (ETF) have reignited, driving both ETH price and on-chain activity higher. This article explores whether ETH can lead a new rebound after BTC, examining three dimensions: regulatory expectations, exchange rate trends, and on-chain data.

I. ETF Expectations: From "Impossible" to "Possible"

In 2023, the market widely believed the probability of a spot Ethereum ETF approval was extremely low, mainly because SEC Chair Gary Gensler repeatedly classified most cryptocurrencies other than Bitcoin as securities. However, in May 2024, the SEC unexpectedly approved 19b-4 forms from multiple issuers, marking a major shift in regulatory stance. Although subsequent S-1 registration statements still need approval, market sentiment has shifted from pessimistic to cautiously optimistic.

According to Bloomberg analysts, the probability of a spot Ethereum ETF being approved by the end of 2024 has risen to about 75%. This change in expectations is directly reflected in ETH's price: within 48 hours of the SEC's approval of the 19b-4, ETH surged over 20%, recording its largest single-day gain of the year. If the S-1 is ultimately approved, ETH may experience a "buy the rumor, sell the news" pattern similar to BTC after its ETF listing in January 2024.

II. ETH/BTC Exchange Rate: Bottom Signal or Long-Term Weakness?

The ETH/BTC exchange rate is a key indicator of Ethereum's relative performance against Bitcoin. In June 2024, the rate briefly fell to around 0.045, its lowest level since April 2021. Historically, the 0.045-0.05 range has repeatedly served as a strong support zone for ETH/BTC, such as before the DeFi summer in 2020 and before ETF expectations heated up in October 2023, when the rate bottomed and rebounded from this area.

Currently, the ETH/BTC rate has recovered from its lows to above 0.05 but has yet to break the resistance at 0.055. If ETF approval expectations continue to build, ETH could attract more institutional capital, pushing the rate toward 0.06 or higher. Conversely, if the ETF is delayed again, the rate may retest support at 0.045.

III. On-Chain Data: Activity and Capital Flows

On-chain data provides positive signals for ETH's short-term price action. According to Glassnode data, the daily number of active addresses on the Ethereum network rebounded to over 500,000 by the end of Q2 2024, up about 15% from the start of the year. Meanwhile, ETH balances on exchanges have continued to decline, now at approximately 16 million ETH, the lowest level since 2020. This suggests that investors are moving ETH to self-custody wallets, reducing potential selling pressure.

Additionally, the recovery of the DeFi and Layer 2 ecosystems provides fundamental support for ETH. The top five protocols by total value locked (TVL)—Lido, AAVE, Uniswap, EigenLayer, and MakerDAO—have a combined TVL exceeding $60 billion, nearly doubling from the lows of 2023. L2 networks such as Arbitrum, Optimism, and Base have seen average daily transaction volumes surpass 3 million, further consuming ETH as a gas token.

IV. Short-Term Catalysts: Macro and Event Drivers

Beyond ETF expectations, the following factors could influence ETH's short-term price:

• Fed Policy Shift: The market widely expects the Federal Reserve to begin a rate-cutting cycle in September 2024. A looser liquidity environment typically benefits risk assets, including cryptocurrencies.
• Ethereum Upgrade: The upcoming Pectra upgrade (expected in Q1 2025) will introduce improvements such as account abstraction and EIP-7251, potentially enhancing network scalability and user experience.
• Institutional Allocation Demand: If the ETF is approved, traditional financial institutions like pension funds and endowments may include ETH in their asset allocations, bringing long-term incremental capital.

However, risks also exist. The SEC's classification of ETH as a security remains controversial. If regulators impose strict conditions on the S-1 approval (e.g., banning staking), it could weaken the ETF's appeal. Additionally, if macroeconomic data continues to surprise to the upside (e.g., inflation rebounding), it could delay the rate-cutting timeline, putting pressure on the crypto market.

V. Conclusion: ETH Likely to Outperform in the Short Term, but Beware of Pullbacks

Overall, rising spot Ethereum ETF expectations, the ETH/BTC exchange rate at historical lows, improving on-chain data, and a favorable macro environment collectively support a short-term rebound for ETH. If the ETF is approved in Q4 2024, ETH's price could break its all-time high from November 2021 (around $4,800). Even if the ETF is delayed, ETH, driven by the DeFi and L2 ecosystems, is likely to find support near $4,000.

However, investors should note that the cryptocurrency market is highly volatile. ETH could experience a 20%-30% pullback in the short term due to a "sell the news" event. It is advisable to monitor the SEC's S-1 approval progress, the Fed's September meeting, and whether the ETH/BTC rate can hold above 0.055.

Risk Disclaimer

The above content is for informational purposes only and does not constitute investment advice. The cryptocurrency market carries extremely high risk, and prices can fluctuate dramatically. Investors should make decisions based on their own risk tolerance and consult professional financial advisors. Past performance does not guarantee future results. Invest with caution.