The potential approval of spot ether exchange-traded funds (ETF) in the U.S. has generated significant interest in the cryptocurrency market. If approved, it is believed that this could lead to a substantial increase in the value of ether, similar to the market reaction observed with bitcoin ETFs.

According to CoinGecko data, Bitcoin experienced a surge from $42,000 to over $73,000 in the two weeks following the commencement of trading of the ETF on Jan. 11.

This sets the stage for anticipation surrounding the decision on the ether ETF, with notable buying activity observed on both centralised and blockchain-based exchanges.

QCP Capital has suggested that the approval of spot ether ETFs in the U.S. could potentially trigger a rally of up to 60% in the coming months for the second-largest cryptocurrency. This forecast is based on the market reaction witnessed following the approval of spot bitcoin ETFs in January.

QCP Capital also highlighted the market’s expectation of future price fluctuations, with Friday’s implied volatility exceeding 100%. The firm expressed its belief that approval is highly likely, with trading expected to commence as early as the following week.

“With Friday implied volatility above 100%, the market is expecting fireworks,” QCP said. “VanEck’s ETF has been listed by the DTCC. We think approval is now highly likely with trading expected as early as next week.”

Additionally, CryptoQuant reported increased buying activity on both centralised and blockchain-based crypto exchanges, with holders purchasing over 100,000 ETH in spot markets on Tuesday, marking the highest daily level since September 2023.

This surge in buying activity coincided with reports of a favorable decision on the ETF, leading some analysts to increase the odds to over 75%.

Furthermore, there has been a significant increase in open interest on ether-tracked futures, reaching a record $14 billion, which accounts for 67% of bitcoin open interest as of Wednesday.

Activity on the Chicago Mercantile Exchange, a favored exchange among institutions, also surged, with ether futures witnessing a record notional $2.85 billion of trading on Tuesday.

CryptoQuant noted that traders seem to be increasing their exposure to ETH relative to Bitcoin, with the largest daily spot buying from ETH permanent holders recorded so far in 2024.

However, the firm cautioned that high exchange flows are typically associated with price volatility, suggesting that ether prices in the coming days could experience heightened volatility.

Despite the optimism surrounding the potential approval of the ETF, the firm’s analysts warned of a significant price correction  should the application be dismissed.

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This warning comes in the wake of six issuers, including BlackRock, filing updated copies of their ether ETF proposals ahead of a decision due soon. Notably, all plans to stake the token were removed, indicating a possible regulatory roadblock.

Staking, which involves locking a cryptocurrency for a set period of time to support the operation of a blockchain in exchange for rewards, has been a point of focus.

The removal of plans to stake the token from the updated ETF proposals suggests potential regulatory hurdles. As of Thursday, annualized yields on ether staking were nearly 3%, according to data from popular staking service Lido.

Stay updated on the latest developments regarding the potential approval of spot ether exchange-traded funds (ETF) in the U.S.