Ethereum
What they mean for Solana and other Altcoins
- The recent approval of the ETH ETF is said to have sparked a massive revolution among altcoins, with L2 and DeFi OG expected to recover.
- However, projects labeled as “Ethereum killers” would be left behind in the post-ETH ETF environment.
The recent approval of Ether Exchange Traded Funds (ETFs) has sparked a short-term rally, forcing Bitcoin in the $70,000 area and Solana back in the $180 region. However, several external factors highlighted by Crypto News Flash reversed market sentiments against a bullish continuation, causing assets to stabilize just below critical resistance levels. Interestingly, analysts believe that approval of the S-1 registration statements would trigger a further rally that would set new record prices.
In this case, altcoins would certainly dominate the market, as evidenced by Bloomberg analysts who revised their chances of approval from 25% to 75%. At that time, ETH climbed 20% to $3,800, highlighting the relevance of this development for decentralized finance (DeFi) compared to the one-time approval of the Bitcoin ETF. To analysts, the approval of the BTC ETF sealed its status as an institutional asset, however, the ETH ETF would legitimize altcoins and prepare them for new highs during the next bull market. Beyond that, one analyst expects this green light to spark an L2 and DeFi OG rally.
To support this point, we can recall that Ethereum Layer 2s, including Optimism and Arbitrum, saw similar price movements to ETH when the market rebounded after the corresponding ETF was approved. As expected, DeFi OGs like Uniswap or Aave have seen similar price developments, seeing high double-digit price increases due to their direct ties to EVM technology.
More impact of ETH ETFs on Altcoins
Additionally, the complete takeoff of Ether ETFs is expected to impact EVM-enabled projects. This implies that Avalanche and Polygon have better chances than Algorand in the next bull run. The reason is that EVM compatibility will become a more crucial topic than ever in previous years, considering that ETH has gained some form of regulatory clarity, generating hype around the project.
In addition to the above category, decentralized exchanges (DEX) and lending protocols would be open for general adoption due to the simplicity and flexibility offered by Ether ETFs. According to analysts, projects offering the most functional utility would benefit the most. This creates huge potential around DEXs like SushiSwap or Balancer and borrowing/lending protocols, like Aave and Compound.
Unfortunately for Ethereum competitors like Solana, analysts believe they would struggle enormously in the post-ETH ETF environment. Regardless, Solana would still reach all-time highs since the ETH spot ETF created the clarity needed for decentralized blockchains.
For technological developments such as zero-knowledge proofs that power many layer 2 Ethereum and real-world asset (RWA) tokenization experiments, there would be a massive revolution for them. According to analysts, the approval of the ETH ETF would allow more projects to be built on Ethereum, with a transition from L1s to Ethereum rollups. Amidst all this, investors have been advised to do their research before investing in any project. In addition to this, they should avoid getting carried away with enthusiasm and momentum when the market is staging an uptrend.
At press time, ETH was trading at $3,827 after a 1.78% decline over the past 24 hours.