Ether and Altcoin Prices Soar. Many analysts believe that regulators’ decision to hold off on Ether (for the time being) has boosted the asset’s potential for growth. The US Securities and Exchange Commission (SEC) formally concluded its investigation into the potential security classification of Ether ETH $3,382 on June 19, 2024.
Laura Brookover, a lawyer with Consensys, predicted that “there will be no more protestations from the SEC that ETH is a security” in the cryptocurrency market. Coinindesk asked University of Arkansas School of Law professor Carol Goforth about the decision, and Goforth explained that the SEC would not be pursuing its inquiry. This decision has not been finalized.
According to Consensys, a significant obstacle that might have ended Ethereum’s existence has been lifted now that the SEC has decided not to inquire into the network.
How will the price of Ethereum react to a more straightforward route now that the “momentous” SEC pullback has ended negative regulatory worries about ETH as a security? Could Ethereum’s emancipation help other altcoins that share features with Ether? The SEC inquiry touched on cryptocurrencies with similar characteristics.
Ether is Expected to Rise, say Observers
Following a horizontal pattern that has been there since May 23, when news of the clearance of the spot Ether ETF broke, the price of Ether has been relatively constant since the SEC ended its inquiry.
As of this writing, Ether has lost 2% of its value. Because of this, some investors are questioning whether the altcoin market will experience a similar Ether and Altcoin Prices Soar. Some industry watchers have even predicted substantial expansion shortly.
The removal of “the major regulatory barrier” for Ethereum “sets a significant precedent for regulators worldwide,” according to Conor O’Neill, community lead and partner of investment analytics firm Blockcircle, who spoke with Coinindesk. The SEC’s decision to end the probe “frees any investors from a significant amount of risk and uncertainty.” According to O’Neill, the price of Ethereum is about to skyrocket:
“Without a worldwide catastrophe, it’s hard to imagine a situation in which the price of Ethereum wouldn’t rise sharply from where it is now.” Additional factors should be taken into account as well.
Ethereum (ETH) Price Affected
The price of Ethereum (ETH) will be affected by the anticipated introduction of spot Ether exchange-traded funds on July 2. Expectations are strong that traditional markets will start pouring money into the ETFs, similar to when the U.S.-based spot Bitcoin BTC $61,589 ETFs came out in January. This would lead to a rise in demand for Ethereum and an increase in its price.
According to O’Neill, the ETH “is highly likely to have a long-term positive impact on the Ether and Altcoin Prices Soar.” Shortly, we might witness a sell-the-news event similar to what we saw when the Bitcoin ETFs were approved. Since some of this news will be factored in when the ETF trading begins, he predicted that a short-term decline is likely.
The SEC’s approval of Ether ETFs is good news for the cryptocurrency markets, but Blockcircle’s partner pointed out that the clearance was conditional. Staking is not an option for exchange-traded funds that own Ether. As Goforth put it, “the SEC has alleged that staking itself involves an investment contract,” which means that token holders will no longer have the chance to earn additional rewards.
According to O’Neill, suppose the SEC continues to regulate digital assets while remaining completely opposed to staking strictly. In that case, it might harm ETH’s price and long-term performance as an institutional asset.
Grayscale Outflows
Similar to the Bitcoin ETF, some have wondered if Grayscale outflows would influence Ether’s price following the ETF’s debut. After the debut of Ethereum ETFs, its $10 billion-valued Grayscale Ethereum Trust may start to experience significant withdrawals. This may have the same effect on the price of ETH as it did on Bitcoin.
O’Neill elaborated that the new Bitcoin ETFs saw far more investment capital flowing into them than Grayscale due to the former’s higher management costs. However, he pointed out that Grayscale’s Ether trust cost is now lower than other Ether ETF providers.
His take is that Grayscale isn’t interested in a Bitcoin ETF 2.0 and that their holdings of Ethereum “are likely to increase exponentially with the launch of the ETF.” O’Neill predicted that ETH’s future value would follow “a similar trajectory to Bitcoin’s price, with a dip followed by an exponential rise.”
However, he pointed out a significant difference between the Bitcoin ETF and the Ether ETF: the impact of unexpected acceptance. Many market watchers were surprised by the approval of Ethereum. Thus, it’s reasonable to assume that its price is artificially low. As a result, this would support the idea that Ether and Altcoin Prices Soar and surpass Bitcoin’s.
Altcoin Prices can Benefit Indirectly
The entire crypto market experiences a boost whenever the price of Bitcoin increases. Likewise, when Ether’s value increases dramatically, this happens in the altcoin market. The decision to discontinue the inquiry may affect other altcoins that the SEC has accused of being securities.
Binance and Coinbase, two cryptocurrency exchanges, have been indicted by the SEC for multiple violations of securities laws. Notable altcoins designated as securities by the SEC include SOL $137 from Solana, ADA $0.39 from Cardano, and MATIC $0.5601 from Polygon. Based on O’Neill’s analysis, the SEC’s pullback could be advantageous for decentralized finance (DeFi) initiatives like Aave or Chainlink, and layer-2 networks like Arbitrum, Optimism, or Base.
Nonetheless, as O’Neill pointed out, many of them allow staking and are still under some SEC oversight. As the US presidential election draws near, Donald Trump’s pro-crypto policies could cause the SEC to take a different approach.
The regulatory agency’s stance on staking and the future of SEC Chair Gary Gensler are both uncertain. Some have even mooted the possibility of cryptocurrency exchange-traded funds (ETFs).
The SEC’s swift green light of spot Ether ETFs, the proliferation of ETF issuers, and their decision to end their inquiry suggest a possible strategy change. These changes are entering a critical juncture for Ethereum and the cryptocurrency sector as a whole.
