Bitcoin (BTC)

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

Published January 11, 2024 1:38 PM

By Teuta Franjkovic

Bitcoin ETFs approval has immense impact on altcoins' price | Credit: Jack Taylor/Getty Images

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.

https://twitter.com/RippleXrpie/status/1744046299979158003

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.

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.

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:

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.

Think about it like this;

Right now there is a limited pool of money in crypto and it is moving between Bitcoin and Altcoins. When Bitcoin goes up it sucks liquidity from Alts and vice versa. We are witnessing that now as Bitcoin is moving up and Alts are bleeding.

When the ETF…

— Ran Neuner (@cryptomanran) January 9, 2024

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.

#Bitcoin ETF has been approved.

But #altcoins are pumping! pic.twitter.com/521UR9maAl

— Hardy (@Degen_Hardy) January 10, 2024

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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About the Author

Teuta Franjkovic

Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.

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