Jan 10, 2023

Ether (ETH) and native tokens of applications built on Ethereum surged in the past 24 hours as traders bet on the possibility of an ether exchange-traded fund (ETF) following the expected approval of a bitcoin ETF in the U.S. Ether exchanged hands over $2,400 in early European hours Wednesday, up 5% in 24 hours. LDO, the governance token of the decentralized autonomous organization (DAO) behind liquid-staking system Lido, gained over 20% while the ARB token of Ethereum scaling solution Arbitrum rose almost 17%. Bitcoin fell 2.2%. BlackRock has filed an S-1 form with the U.S. Securities and Exchange Commission (SEC) for its iShares Ethereum Trust, a spot ether ETF. 

With the crypto industry anticipating the SEC approving a spot bitcoin ETF as early as today, BlackRock (BLK) and ARK 21Shares both cut the fees for their proposed ETFs, joining rivals who announced reductions yesterday.  BlackRock said it will charge 25 basis points on net asset value in a new S-1 filing on Wednesday, having previously revealed a fee of 30 basis points on Monday. The asset-management giant is offering a promotional rate of 12 basis points on the first $5 billion during the first 12 months after listing. ARK 21Shares reduced the fee by 4 basis points to 0.21%, having previously said it would charge 0.25%. The firms are waiving the fee entirely for the first six months or the first $1 billion in assets, whichever comes first.

Price volatility following a series of fake tweets from the SEC’s X account caused nearly $90 million worth of bitcoin long and short positions to be liquidated, showcasing manipulation risks associated with the industry. Hackers caught hold of the SEC’s X account on Tuesday, using it to post a nod for the much-awaited bitcoin exchange-traded fund (ETF) approval decision. It later posted “$BTC,” before both tweets were promptly deleted. Those tweets caused the bitcoin price to immediately spike to $47,680 from the $46,800 level. It then fell as low as $45,400 as the tweets were found to be fake.  

As the market awaits a decision from the U.S. Securities and Exchange Commission over spot exchange-traded fund filings, analysts are predicting that bitcoin ETFs may see well over $1 billion in inflows over the next three months, and potentially more than $100 billion by the end of the year. 

Standard Chartered Bank, which has also predicted that bitcoin will rise to $100,000 by year-end, is expecting significant inflows into the funds if the SEC approves the products. The bank predicts in a report that there will be inflows of $50 billion to $100 billion this year if there's a win for the asset managers who have applied to issue spot bitcoin ETFs. 

This means between 437,000 and 1.32 million new bitcoins would be held in U.S. ETFs by the end of 2024. If the inflows materialize as expected, bitcoin could rise to levels closer to $200,000 by the end of 2025, said the bank.

- Omkar Godbole