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What Spot Bitcoin ETF Means for Altcoins as ADA, DOGE, and AVAX Skyrocket

Last Updated January 11, 2024 1:38 PM
Teuta Franjkovic
Last Updated January 11, 2024 1:38 PM

Key Takeaways

  • SEC approval of spot Bitcoin ETF sparks optimism for similar ETF for XRP
  • Bitcoin ETF approval spurs altcoin market rally
  • The new funds could serve as a gateway to wider adoption and diversification

The United States Securities and Exchange Commission (SEC) gave its approval on Wednesday for the launch of exchange-traded funds (ETFs) that will track the price of Bitcoin.

The introduction of this ETF, which sets a precedent in mainstream investment products, could act as a catalyst, stimulating interest and confidence in other crypto assets.

Experts Predict XRP Spot ETFs in Wake of Bitcoin ETF Approval

This may lead to the creation of similar ETFs for alternative cryptocurrencies. Cryptos such as XRP, or Solana (SOL), thus expanding the range of investment options in the crypto market.

Steve McClurg, the co-founder and chief investment officer of Valkyrie Funds, recently alluded  to the potential approval of Ethereum or XRP exchange-traded funds (ETFs) following the expected launch of Bitcoin spot ETFs.

He said : ” It wouldn’t surprise me if we saw Ripple or Ethereum spot ETFs out there.”

This indicates a possibility of expanding the scope of cryptocurrency ETFs beyond Bitcoin in the near future.

Last year, there was an incident where the price of XRP surged by 10% following the circulation of false news about a purported XRP ETF filing by BlackRock.
Additionally, the current Relative Strength Index (RSI) of XRP stands at 34.83. An RSI at this level suggests that the asset is in a neutral position, indicating that it could be equally susceptible to either bullish (upward) or bearish (downward) price movements in the near future.
The prospect of XRP ETF applications might reignite the ongoing legal and regulatory debate between XRP and the U.S. Securities and Exchange Commission (SEC). Meanwhile, in the broader cryptocurrency market, analysts are forecasting  significant growth following the approval of a spot Bitcoin ETF.
Specifically, they predict  that the approval could contribute an additional $1.5 trillion to the overall crypto market capitalization. Regarding the newly approved Bitcoin ETFs, it’s anticipated that they could attract around $5 billion in inflows in the first quarter and potentially $10 billion in the second quarter.

Experts Predict Institutional FOMO as Bitcoin ETF Launches

The approval of exchange-traded funds (ETFs) is expected to have a positive impact not just on Bitcoin, but on the broader cryptocurrency markets as well. Major altcoins like Solana , Dogecoin , XRP , and Arbitrum  have already seen a substantial increase in their market capitalization, adding $800 billion since Bitcoin recovered from its lows in 2022.
Adam Berker, from the payments firm Mercuryo, has highlighted  that the approval of ETFs will significantly contribute to making cryptocurrencies more accessible.
“If the spot Bitcoin ETF approval does come to pass, it will be a positive decision for the industry. Investing in crypto will become more accessible, causing an influx of funds into this market. There is a lot of interest towards this financial instrument, and it is clearly visible.”

Altcoin Market Rally: ADA, DOGE, AVAX, and DOT Surge

The excitement in the cryptocurrency market isn’t limited to Bitcoin and Ethereum; other altcoins are also experiencing significant gains. For instance, Cardano (ADA)  has seen a notable increase in its value, rising by 12.48% and currently trading at around $0.58, with its market capitalization reaching $20.5 billion. Technical chart analysis suggests a potential upward trend for Cardano, with predictions indicating that the ADA price could rally to $1 within the year.

Cardano price
Credit: CMC

Also, recent market data trends reveal an intriguing development in the relationship between Dogecoin (DOGE)  and Bitcoin (BTC). Over the past month, following the SEC’s approval of Bitcoin ETFs, there has been a negative flip in the price correlation between DOGE and BTC. Despite this divergence in their correlation, the price of Dogecoin experienced a significant surge. This suggests that while traditionally Dogecoin’s price movements have often mirrored those of Bitcoin, recent events, particularly the approval of Bitcoin ETFs, have led to a distinct shift in this trend, with Dogecoin charting its own course in the market.

Doge price
Credit: CMC

Looking at other altcoins at the time of writing:

  • BNB  is trading at the level of $296.
  • Solana  is trading at $96.
  • XRP  is worth $0.58.
  • Cardano  is trading at $0.53, AVAX at $36.61.

Let’s look at some of the altcoin projects that have shown the most significant increases recently:

Credit: CMC

Similarly, other altcoins like Avalanche  (AVAX) and Polkadot (DOT)  are also experiencing significant upward movements. Avalanche’s price has increased by 11.47%, while Polkadot has seen a rise of 14.6%.

Why Did Altcoins Rise After the Bitcoin ETF Decision?

The recent approval of the Bitcoin ETF has been a catalyst in boosting overall confidence in the cryptocurrency market. This landmark decision is seen as a potential gateway to wider acceptance and adoption of cryptocurrencies among a more diverse range of investors. Such a development creates a favorable environment not only for Bitcoin but for other cryptos, too.

Bitcoin ETFs is could open the cryptocurrency market to a broader spectrum of investors, potentially enhancing market liquidity. This influx of liquidity can also positively affect altcoins, contributing to an uptick in their prices.

Moreover, the Bitcoin ETF is perceived as a move that mitigates some of the risks traditionally associated with cryptocurrency investments. As a result, investors who are gaining confidence in the crypto market are increasingly exploring altcoins, leading to a diversification of their investment portfolios.

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