How much would Ethereum price rise if Bitcoin ETF is approved?

The U.S. Securities and Exchange Commission (SEC) is getting closer to its January 10 deadline for a Bitcoin ETF decision, with markets holding out hope for approval. This critical event could have broad implications for the cryptocurrency market, including the second-largest cryptocurrency, Ethereum.

Hopes for an Ethereum ETF

Approval of a Bitcoin ETF could set a regulatory precedent and pave the way for other cryptocurrency-based ETFs. The reason is that approval of a Bitcoin ETF could involve establishing a framework that applies to other cryptocurrencies, including Ethereum.

In December 2023, the SEC postponed the decision on several pending Ethereum ETF applications in the United States until May 2024. These include the Hashdex Nasdaq Ethereum ETF, the Grayscale Ethereum Futures ETF, the VanEck Spot Ethereum ETF, and the spot Ethereum ETF submitted by Cathie, Wood Sister's ARK Invest and 21Shares.

The delays are part of the SEC’s process, which involves gathering public input before deciding whether these ETFs should be listed. Still, they also come as the commission seeks to classify some proof-of-stake (PoS) cryptocurrencies as securities.

Interestingly, Ethereum has not been classified as a security in any of the SEC’s recent lawsuits against cryptocurrency exchanges. The commission has also not challenged Ethereum’s classification through the Commodity Futures Trading Commission’s (CFTC) ETF registration process.

This increases the likelihood that a spot Ethereum ETF will be approved in the U.S. in May 2024, which could boost ETH prices.

Ethereum-Bitcoin Correlation

If the approval of a Bitcoin ETF does not become a sell news event, then Ethereum’s price is well-positioned to rebound due to its consistent correlation with BTC price in recent years.

ETH/USD and BTC/USD daily correlation chart. Source: TradingView

Essentially, this means that the approval of a Bitcoin ETF could trigger a significant increase in traditional investors’ exposure to cryptocurrencies. This, in turn, could cause ETH prices to surge as the market anticipates increased demand.

Conversely, a delay or denial could lead to short-term bearish pressure as the market adjusts to the setback. A recent survey by Bitwise found that only 39% of U.S. financial advisors believe a Bitcoin ETF will be approved this year.

Ethereum price technicals hint at correction

From a technical perspective, ETH’s price is approaching the resistance trendline of its prevailing ascending wedge pattern ahead of the Bitcoin ETF decision. A delay or rejection could result in a price correction to the lower trendline of the wedge near $1,865 in February.

ETH/USD weekly price chart. Source: TradingView

The $1,865 level coincides with ETH’s 0.236 Fibonacci line and its 50-week exponential moving average (50-week EMA; red wave).

On the other hand, an ETF approval could completely invalidate Ethereum’s rising wedge setup in favor of an ascending triangle reversal pattern, as shown below.

ETH/USD weekly price chart. Source: TradingView

By March, the upside target of the triangle is close to $3,870, which represents a 75% increase from current price levels and coincides with the 0.786 Fibonacci line.