Markets
Here’s how the crypto market reacted to the Ether ETF approvals: Bitfinex
The past week has been memorable for the crypto community. More than four months after approving similar products for Bitcoin, the U.S. Securities and Exchange Commission (SEC) has given a green signal to the first wave of spot Ethereum exchange-traded funds (ETFs).
According to the latest Bitfinex Alpha report, the crypto market’s reaction to the event is akin to a roller coaster ride due to the incidents surrounding the approval. Both bitcoin (BTC) and ether (ETH) experienced significant volatility and sudden price movements as anticipation of the SEC’s decision intensified.
Increase chances of approval
Last week started with market analysts increasing the chances of obtaining approvals from 25% to 75%. The sudden change in sentiment was reflected in key metrics such as the Bitcoin Volmex Implied Volatility Index (BVIV), Ethereum Volmex Implied Volatility Index (EVIV), and Volatility Risk Premiums (VRPs) for crypto assets.
These BVIV and EVIV rose to 64 and 85.5, while Bitcoin VRP and Ethereum VRP climbed to 16 and 34 before falling to 10 and 30, respectively.
Before the tides changed for Ether ETF approvals, the crypto market was in a period of reduced volatility and relative stability following the April 19 Bitcoin halving. During this period, BVIV and EVIV decreased from 75 to 55 and from 80 to 63, respectively. Similarly, the VRPs for Bitcoin and Ethereum fell to 1.5 and 8.5, respectively.
As the May 1 Fed meeting approaches, investor concerns about possible interest rate changes have sent BVIV, EVIV and VRP higher again. At that time, VRPs reached 13 and 29.2 for Bitcoin and Ethereum. However, the market stabilized after the Fed meeting.
The effects of the SEC decision
When the SEC finally approved on May 23, Ethereum ETFs, BVIV, and EVIV went from 64 and 85.5 to 52.5 and 69.5, respectively, in a matter of hours. The Bitcoin and Ethereum VRPs were not far behind as they also fell to 7 and 18.
The change in market sentiment was accompanied by a decline in the prices of BTC and ETH, which had increased to $71,000 and $3,900 respectively before approval due to activities in the perpetual futures market. After the initial excitement over the SEC’s decision, investors began to take their profits, causing cryptocurrency prices to fall further.
At the time of writing, BTC And ETH were trading at $68,000 and $3,871 after falling 1% in the past 24 hours.