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Bitcoin tread water on Wednesday as investors awaited the official U.S. Securities and Exchange Commission approval on spot bitcoin exchange-traded funds, a day after the regulator’s X account posted a false announcement on the highly anticipated news.
The price of bitcoin was last lower by less than 1%, trimming earlier losses of as much as 4%. Meanwhile, ether surged 9% to $2,461.95. Earlier it climbed as high as $2,465.75, its highest level since May 2022.
Both coins initially spiked on Tuesday afternoon in the short period before the SEC said its X, formerly known as Twitter, account had been compromised and misinformed the public. Bitcoin rose as high as $47,901, though that was not the rocket ship rally many hoped to see. Ether climbed to about $2,390.
Bitcoin and ether over the past 24 hours
“The price action was a nightmare for shorter-term leveraged traders, but ultimately, there wasn’t much change, with bitcoin holding up and still looking in position to make a push through $50,000 on the actual confirmation of the SEC approvals,” said Joel Kruger, a market strategist at LMAX Group.
Wednesday marks the deadline for the SEC to either approve or deny the Ark 21Shares spot bitcoin ETF application. It is widely believed that the agency will approve several at once. Some investors expect the decision to be a sell-the-news event, while others expect a big rally.
Data provider CryptoQuant shows that investors are sitting on high unrealized profits — a trend that historically precedes price corrections. If bitcoin does see a big pop after the SEC’s decision, bitcoin could be at risk of a correction to as low as $36,000, said Julio Moreno, CryptoQuant’s head of research.
“As much as bitcoin demand will certainly gain from the approval of the ETFs … a price correction can’t be ruled out,” he said.
While bitcoin took a pause in anticipation of the announcement, expected late Wednesday afternoon, mining stocks, which benefit from increases in the bitcoin price and tend to reflect longer-term investor sentiment, got a lift. Iris Energy jumped 7%, while Marathon Digital gained 2.5% and Riot Platforms added more than 1%.
Rotation into ether
Meanwhile, investors are looking ahead to what comes after a bitcoin ETF approval, particularly for ether.
“The consensus move as soon as the ETF is approved seems to be a rotation from bitcoin into ether,” said Conor Ryder, head of research at the stablecoin company Ethena Labs. “It’s all about getting ahead of the narratives — bitcoin has rallied versus ether for the last six months thanks to spot ETF speculation, and ETF approval ties a bow on that narrative. Meanwhile ETH has struggled to find any momentum and has underperformed compared to most of the smaller Layer 1s like Solana.”
The SEC is due to give decisions on spot ETH ETF applications beginning in May. BlackRock, Invesco, Ark and VanEck are among the firms in line for approval, as well as Grayscale, which is seeking to convert its existing Ethereum Trust (ETHE) into an ETF.
Ether lagged bitcoin in 2023, rising just 90% compared to bitcoin’s 157%. Ether rallies tend to follow bitcoin when crypto bull markets heat up, and precede altcoin rallies.
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