Bitcoin is trading above $50k again, but this time everything is different, and Franklin Templeton is joining the Ethereum ETF race.
BlackRock, VanEck, Fidelity, Invesco Galaxy, Grayscale and Hashdex are ETF contenders seeking SEC approval. Franklin Templeton has become the latest Wall Street firm to apply to create a spot Ethereum (ETH) exchange-traded fund in the United States. The $1.5 trillion asset management company filed its S-1 filing with the U.S. Securities and Exchange Commission on Feb. 12. If approved, it will be listed as the “Franklin Ethereum ETF” on the Chicago Board Options Exchange (CBOE). Interestingly, Franklin Templeton has signaled its intention to stake a portion of the ETF’s ether to generate additional income, similar to ARK’s 21Shares S-1 restatement last week. Franklin Templeton said it will rely on staking Ethereum from the trust’s cold storage wallets, and as a result the trust will receive staking rewards treated as income.
According to the schedule, the SEC must make a decision on VanEck’s application by May 23, ARK 21Shares by May 24, Hashdex by May 30, Grayscale by June 18 and Invesco by July 5. Fidelity and BlackRock applications must be accepted or rejected by August 3 and August 7. However, Bloomberg ETF analyst James Seyffarth expects a decision on all applicants to be made by May 23, similar to how the US securities regulator made a decision on all spot Bitcoin ETFs on January 10. Earlier, on January 30, Seyffarth’s colleague, Bloomberg ETF analyst Eric Balchunas, reduced the chances of approval of a spot Ethereum ETF in 2024 from 70% to 60%.
Meanwhile, Bitcoin’s rise to $50,000 on Monday comes at a time of increased institutional demand, a possible shift in interest rates and looming shortages from the halving (cutting Bitcoin’s miner reward in half) — a stark contrast to the situation just two years ago. Data shows that the last time Bitcoin hit $50,000 was in December 2021, when — unbeknownst to most investors — the cryptocurrency was about to collapse into a sustained bear market marked by 11 consecutive interest rate hikes in the United States, the collapse of several high-profile crypto companies and the exodus of retail investors from cryptocurrency, which led to a significant drop in Bitcoin. However, now, by all indications, macroeconomic conditions are becoming increasingly favorable for risk assets such as Bitcoin. The first big catalyst that many investors are counting on is the upcoming Bitcoin halving. Halving is expected in April, and this is the time when the mining reward for Bitcoin miners is cut in half. Many believe this is a bullish catalyst for BTC price growth in the long term. Positive sentiment is also brewing regarding the performance of Bitcoin ETFs, giving the market further confidence that institutions are buying Bitcoin at an increasing rate. A CoinShares report on February 12 showed that spot Bitcoin ETFs attracted a total of $1.1 billion in inflows over the past week, the largest seven-day period of inflows since the ETFs first launched on January 11.
The sharp rise in the price of BTC provoked a cascade of liquidations of short positions of traders on large crypto exchanges. According to the Coinglass service, in just an hour, the total amount of forcedly closed “shorts” on Bitcoin exceeded $25 million. The second largest cryptocurrency by capitalization — Ethereum (ETH) — also grew, and its rate exceeded $2,500, but in terms of growth dynamics it lags behind the market leader .
The “Fear and Greed” index on the crypto market rose to 79 out of 100 points, which means the sentiment of participants has shifted to the “extreme greed” sector. The current value is considered extremely high; it was last observed in January against the backdrop of Bitcoin’s rise to $47 thousand.
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