Last week was memorable for the crypto community. Over four months after it approved similar products for Bitcoin, the United States Securities and Exchange Commission (SEC) gave a green signal to the first wave of spot Ethereum exchange-traded funds (ETFs).

As a researcher with a background in crypto markets, I found last week to be particularly exciting and significant for the Ethereum community. The long-awaited approval of spot Ethereum exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) brought about intense volatility in the market, with both Bitcoin and Ethereum experiencing dramatic price movements.


Based on the most recent Bitfinex Research findings, the crypto market’s response to the event was similar to riding a rollercoaster because of the events leading up to the approval. The prices of bitcoin (BTC) and ether (ETH) both underwent considerable volatility and abrupt shifts as investors eagerly awaited the SEC’s decision.

Increasing the Odds of the Approvals

Last week, market analysts significantly raised the probability of approvals from 25% to 75%. This shift in perspective was evident in various indicators such as the Bitcoin Volatility Implied Index (BVII), the Ethereum Volatility Implied Index (EVII), and the risk premiums for crypto assets’ volatility.

The values of BVIV and EVIV increased to 64 and 85.5, respectively, while the Volatility Risk Premium (VRP) for Bitcoin and Ethereum peaked at 16 and 34 before dropping back down to 10 and 30.

Prior to the shift in Ether ETF approval trends, the crypto market experienced a phase of decreased volatility and stability, which began after the Bitcoin halving on April 19. During this timeframe, the Bid-Ask Spread Indicator for Bitcoin and Ethereum (BVSI and EVSI) narrowed from 75 to 55 for Bitcoin and 80 to 63 for Ethereum. Similarly, the Volatility Risk Premiums (VRP) for Bitcoin and Ethereum dropped to 1.5 for Bitcoin and 8.5 for Ethereum.

As I analyzed the financial markets in the lead-up to the Federal Reserve’s May 1st meeting, investor anxiety over potential interest rate adjustments caused the BVIV, EVIV, and VRPs for Bitcoin and Ethereum to surge once more. The VRP levels for these cryptocurrencies reached peak heights of 13 and 29.2, respectively. However, following the Fed’s meeting, market stability returned and the volatile swings subsided.

The Effects of the SEC’s Decision

On May 23rd, once the SEC gave its approval for Ethereum ETFs (BVIV and EVIV), their prices took a significant hit, dropping from 64 and 85.5 to 52.5 and 69.5 respectively, in just hours. In response, the Value Realization Prices (VRPs) for Bitcoin and Ethereum also saw a decline, reaching 7 for Bitcoin and 18 for Ethereum.

As an analyst, I’ve observed that the shift in investor sentiment led to a decrease in Bitcoin (BTC) and Ethereum (ETH) prices. Prior to this change, BTC had reached a peak of $71,000, while ETH touched $3,900. The cause for this downturn can be attributed to heightened activity in the perpetual futures market following the SEC’s approval. Once the initial elation subsided, investors started taking profits, further contributing to the price decline.

As I pen down this analysis, Bitcoin (BTC) is priced at around $68,000 while Ethereum (ETH) hovers near the $3,871 mark on major exchanges. Both cryptocurrencies experienced a minor setback, with BTC shedding 1%, and ETH following suit by losing an equivalent percentage in value over the previous 24 hours.

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2024-05-28 23:33