The cryptocurrency market shed $2.5 trillion in value as the prices of major cryptocurrencies Bitcoin (BTC) and Ether (ETH) dropped within the past 24 hours.
This decline comes despite the recent approval of several Ether exchange-traded funds (ETFs) for listing on U.S. exchanges.
According to CoinGecko data, Ether has decreased by 4% since the ETF approvals, reversing the gains it made earlier in the week when it rose 20% amid speculation and updated odds favoring the ETF listings.
The broader CoinDesk 20 index, which tracks the most liquid and widely traded cryptocurrencies, fell by 4.5% over the same period.
“Ethereum’s sell-off on positive news is a typical ‘buy the rumors, sell the facts’ reaction of speculators,” explained Alex Kuptsikevich, a senior market analyst at FxPro, in an email to CoinDesk.
“We shouldn’t be surprised if the price pulls back to the $3000 area again, returning to an important consolidation area. From these levels, large institutional investors can start building a position in ETFs.”
Kuptsikevich also noted a similar market behavior observed in January, following the approval of the first Bitcoin ETF, which saw Bitcoin prices drop by 19% in the subsequent two weeks before a substantial reversal.
On Thursday, the U.S. Securities and Exchange Commission (SEC) approved regulatory filings for Ether ETFs, marking a historic milestone for the second-largest cryptocurrency.
While the SEC has approved the 19B-4 form, allowing for the offering and listing of ETFs, the funds still require the green light on their S-1 filings before investors can trade them.
The SEC’s approval covered documents for eight ETFs from major financial firms, including VanEck, Fidelity, Franklin, Grayscale, Bitwise, ARK Invest 21Shares, Invesco Galaxy, and BlackRock, to be listed on the Nasdaq, NYSE Arca, and Cboe BZX exchanges.
Industry analysts predict that if these ETFs are approved for trading, it could lead to a significant influx of institutional capital into the cryptocurrency market.
Standard Chartered has forecasted potential inflows of up to $45 billion within the first 12 months of trading.
Despite the recent downturn, some traders remain optimistic about Ether’s future performance. They anticipate a rally of over 60% in the coming months, citing increased futures and spot buying demand for the token in the past week.
As the market adjusts to the new regulatory landscape and investor sentiment, the coming days will be crucial in determining whether this downturn is a temporary correction or the start of a more prolonged bear phase for cryptocurrencies.
