Bitcoin’s most recent halving took place in April 2024, and previous halving events have seen Bitcoin’s price rise dramatically in the following year. BTC prices have risen during the second quarter, although this has likely been fuelled by the introduction of spot BTC ETFs.
Historically, it isn’t just BTC that has seen gains following the halving event, though, because as Bitcoin rises, it takes other cryptos with it, and there is the potential for even more gains to be had in other areas of the market. Ethereum, with its own spot ETF launch and continued utility with blockchain developers, represents strong potential for price gains.
Ethereum is a decentralized blockchain. Developers can use the Ethereum network to establish decentralized applications (DApps). It, and Solana, have proven especially popular with meme coin developers, and that trend looks set to continue this year.
Several presale crypto projects are being established on the Ethereum network, including Pepe Unchained which, according to crypto writer Alan Draper, is one of the most appealing new projects in crypto. Other new DApps launching on the Ethereum blockchain include The Meme Games (MGMES), WienerAI (WAI), Shiba Shootout (SHIBASHOOT), and 99Bitcoins (99BTC).
Developers invest in Ether, the network’s native cryptocurrency to develop these tokens, and more app development means greater Ether utility, helping underpin the crypto’s value.
However, while Ether is the native cryptocurrency used by developers on the Ethereum network, the coin is best known as a cryptocurrency used for investing and trading, as well as for buying goods, paying for services, and for use on crypto gambling and gaming websites. It has a total market capitalization of over $400 billion, which is around a third of Bitcoin’s market cap. Its current price of nearly $3,500 is $4,720 which was achieved in November 2021. But it is almost double the $1,850 ETH started the year at and the currency clearly has room for more price increases.
With an unlimited supply of coins, that growth does depend on market factors and trading volume, though. Increased trading volume will be seen in the coming weeks, as ETH is getting its own ETF, following on from the launch of Bitcoin’s spot products.
Bitcoin underwent a ten-year battle with the Securities and Exchange Commission. The SEC argued that Bitcoin’s volatility meant that allowing the trading of ETFs would expose investors to unnecessary risks. However, the courts declared that because of how readily available Bitcoin is, and because of the accessibility of information about it, there was minimal risk associated with further allowing the trading of Bitcoin-based funds.
Following on from that decision, and the subsequent January launch of BTC funds, the SEC gave the green light to Ether ETFs in May, stating that the findings of the court would also be similar for Ether funds, and there was little point in further contesting applications.
Fund managers and investment groups, including many that had already launched Bitcoin funds, started submitting applications. Early applications were rejected because they included staking as part of the fund process. Staking means locking Ether into a smart contract to assist in verifying transactions.
The SEC rejected staking because they claimed it constituted the trading of securities. After staking was removed, applications were accepted and the first spot ETFs launched in late July.
When Bitcoin ETFs launched, billions of dollars of new money entered the market as fund managers looked to purchase BTC. However, it took some time before BTC prices were affected. At the end of February, Bitcoin broke and held $50,000 resistance levels and then went on a bull run to achieve an all-time high of over $73,000 by the middle of March: a more than 50% increase from when spot ETFs were launched.
The removal of staking from funds has put a slight dent in Ether’s armor as it reduces potential gains from the investments, but if ETH prices follow a similar path to BTC prices, it could see a significant boost by the end of August.
Ether’s price boost is dependent on the market, as a whole, as the cryptocurrency market effectively mirrors Bitcoin’s movements. Bitcoin has overcome several potential hurdles this year.
The U.S. and German governments offloaded large volumes of Bitcoins they had seized from criminals and illegal operations and trustees working on behalf of the bankrupt Mt. Gox crypto exchange also started making payments to creditors. Despite these actions, BTC prices have risen steadily from the beginning of July, when they suffered as investors cashed in.
Investors are hoping Bitcoin’s halving will have a positive impact on BTC prices. Halving events occur roughly every four years with previous events in 2020, 2016, and 2012. In those instances, BTC prices rose approximately 12 months later. And, when they did, they took the rest of the cryptocurrency market with them.
The combination of continued ETF investment and the post-halving boost could lead to a significant impact on the market.
There is also some hope coming from the political world: specifically, the U.S. election where Donald Trump is vying to return as President after four years away. Despite having previously derided Bitcoin, calling it nothing short of a scam, his opinion has not only softened in the past few months but completed a full U-turn.
While up against incumbent President Joe Biden, Trump has sold himself as being the savior of cryptocurrency. Following the assassination attempt on Trump, Bitcoin prices saw a decent rise. Analysts claim this is because the attempt helped further improve the election favorite’s chances of being voted in.
Current Vice President, Kamala Harris, looks to be the favorite to take over from Biden, who recently announced he would not run for President following calls from within his party to stand aside. Harris has not spoken strongly for or against cryptocurrency, although it is likely that she will continue Biden’s approach to the market.
Trump remains the favorite to win the election, although Harris is likely to put up more of a fight than Biden, and, if she does win, the market will want to hear her opinions on cryptocurrency.
For now, Ethereum remains firmly in Bitcoin’s shadow. However, the second largest crypto has genuine and ongoing utility. It is widely viewed as having the most use cases of any cryptocurrency, and this helps give it some stability. For it to overtake Bitcoin, it would need substantial outside investment. Some of that investment will likely come following the launch of spot ETFs, but analysts predict that the net inflow into Ether will likely only be around a quarter to a third of the inflow that Bitcoin saw, which is in keeping with the market capitalization of the two coins.
In the meantime, new DApps and tokens will continue to launch on the Ethereum network and its price is likely to make reasonable gains following the start of the latest chapter in cryptocurrency. And, if projects like Pepe Unchained perform well, and Trump is elected as President, this will help push Ether prices up, possibly even outperforming Bitcoin’s performance.
