Bitcoin Falls as the Ethereum ETF Rises. Where Prices Are Headed Next.

Friday saw minimal movement in Bitcoin, which continued to rise after a recent increase as investors remained upbeat. As asset management BlackRock submitted an Ethereum ETF application, the second-biggest cryptocurrency took center stage.

The price of Bitcoin has decreased by less than 1% in the past day to $36,000. On Thursday, the token reached its highest level since early May 2022, when cryptocurrencies entered a catastrophic bear market. The biggest digital asset has broken out of abnormally low volatility and trading volumes, rising more than 30% in less than a month.

According to Rachel Lin, CEO of trading platform SyFutures, one cause for this strong bullish momentum might be the market’s limited circulating quantity of Bitcoin. For more than three months, 90% of Bitcoins in circulation have remained unchanged, leaving any new entrant chasing the remaining 10%, pushing the price further higher. She went on to say that the data also reveals a strong optimistic bias in the derivatives market, pointing out that call options contracts — bullish wagers on price rises — are concentrated around price targets of $40,000, $45,000, and $50,000.

While recent confidence that interest rates have peaked has increased all risky assets subject to increasing borrowing costs, Bitcoin has outpaced the Dow Jones Industrial Average and the S&P 500.

Much of Bitcoin’s outperformance has been driven by crypto-native triggers, including expectations that authorities would authorize the first spot Bitcoin exchange-traded fund (ETF), ushering in a new wave of investor interest in cryptos. Since the summer, when BlackRock and other traditional financial titans applied for their own spot Bitcoin ETFs, traders have grown increasingly optimistic that approval is just a matter of time.

BlackRock (BLK) has done it yet again. Revelations that the asset management applied for an Ethereum ETF propelled prices for the second-largest cryptocurrency to the highest levels in 18 months, much as the group’s petition for a Bitcoin ETF did in the summer. Ether has risen 10% in the last 24 hours to more than $2,100, peaking at $2,150.

“Blackrock’s application for an Ethereum Spot ETF further proves that the investment world is readying itself to embrace crypto assets,” said Bradley Duke, chief strategy officer at exchange-traded product group ETC. “It makes sense that following any approval of a spot Bitcoin ETF by the SEC, approval of a spot Ethereum ETF would follow closely.”

Aside from Bitcoin and Ether, smaller tokens or altcoins were increasing, with Cardano up 2% and Polygon up 3%. Memecoins were less optimistic, with Dogecoin down 1% and Shiba Inu down 3%