Will Ethereum ETF Lift Or Drag Bitcoin?

Ever thought how Ether ETF approval could really boost your crypto game? Picture this: now that Ether ETF gets the go-ahead and suddenly, it's not just Ethereum that's in the spotlight—Bitcoin could shine too!

Imagine the buzz around Ethereum attracting more folks to crypto, making Bitcoin even more popular and valuable. This could be your chance to see your Bitcoin investment grow. Let’s dive into how this could happen and why it might be a big win for your wallet.

1. Microstrategy's Michael Saylor States Spot Ether ETF Approval 'May Be Better for Bitcoin'

Recently, Michael Saylor, a big name in both the business world and crypto communities, spoke about this. He thinks that when Ethereum gets this nod from regulators, Bitcoin could see some benefits too.

However, note that Michael is a prominent advocate for Bitcoin, having led MicroStrategy to invest heavily in the cryptocurrency as a part of its corporate treasury strategy. In fact, MicroStrategy owns 214,400 bitcoins as of May 1, 2024. This translate to $14.5 billion worth and is currently the public company holding on to the most bitcoins.

So with all these in mind, let me break down how this could help you make smarter investments and possibly grow your money.

2. What's the Big Deal About an Ether ETF?

I’ve been following crypto trends closely, and here’s what Saylor’s insights means:

• A Nod from Regulators on Cryptocurrency: Now that Ether ETFs get the green light, it means regulators are getting more comfy with cryptocurrency. When something similar happened with gold, the introduction of gold ETFs in 2003 led to an explosive 300% rise in gold prices over the following decade. We are likely to see something like this now with both Bitcoin and Ethereum ETF launches.

• Boosting Confidence In Cryptocurrency: Remember when Bitcoin futures hit the market and Bitcoin’s price soared to nearly $20,000 in 2017? If an Ether ETF starts trading, it could pump up investor confidence and lead more people to invest in Ethereum and Bitcoin as well.

• Investor Demand In Both Bitcoin and Ethereum: There's increasing demand from institutional investors for regulated crypto products. For instance, a survey by Fidelity found that 36% of institutional investors in the U.S. and Europe own cryptocurrencies, and a regulated ETF could potentially increase these numbers due to reduced risks associated with direct purchases.

So, Are Bitcoin and Ethereum Really Playing Together?

The chart you're looking at shows how closely the prices of Ether and Bitcoin have moved together over the past year. When the correlation coefficient, that number on the chart, is +1, it means Ether and Bitcoin prices moved exactly in the same direction during that time. If it's -1, they moved in completely opposite directions.

So, Bitcoin and Ethereum often move in sync because they’re the big players on the team. When one scores, the other often does too. But they also have their own games where they can score separately based on their unique strengths.

Looking at the Flip Side: Could There Be Downsides?

It’s not all sunshine, though. Here are some things to take note too:

1. Market Shifts: If tons of money rushes into Ethereum because of the ETF, some of that money might move away from Bitcoin. This might particularly impact Bitcoin if investors view Ethereum’s technological advancements and broader application scenarios as more promising. This might be what Michael Saylor is thinking, hence addressing this concern during the “What Bitcoin Did ”podcast.

2. Volatility from Correlation: Increased correlation between Ethereum and traditional financial markets due to the ETF could lead to greater price volatility. If Ethereum encounters any issues, such as technical problems or regulatory challenges post-ETF approval, it could negatively impact the perception of all cryptocurrencies, including Bitcoin even if there is no negative news about Bitcoin.

3. Regulatory Spotlight: While regulatory progress is generally positive, increased attention might lead to harsher regulations that could stifle innovation or impose burdensome requirements on Bitcoin and possibly, other cryptocurrencies as well.

3. Conclusion: Why This Matters to You

So, this whole Ether ETF thing isn’t just good news for Ethereum; it could be a win for you as a Bitcoin investor too. Most expect both Bitcoin and Ethereum to go up with the ETF launches. The question is, by how much? The crypto world is always changing, and staying ahead means you can make smarter choices with your money.

Steps to Take Now:

1. Keep Learning: Sign up for updates like the Crypto Profit 101 newsletter. It’s a great way to stay on top of changes.

2. Think it Through: Look at how these shifts could affect your investments. This can be a good time to rebalance your total portfolio, that is including your other non-crypto assets so that you can reduce your co-relation risk.

3. Spread Your Coins: Think about mixing Bitcoin and Ethereum in your portfolio. Consider other altcoins that taps on Ethereum’s network for better investing opportunities. This way, you cover more ground and can handle ups and downs better.

Final Thought: As we watch these big changes unfold in crypto, think about where you want to be. Are you going to dive into the waves or watch from the beach? Make choices that move your investments forward.