Brief Surge: Ethereum Fees Hits $100 Post BlackRock’s ETH Filing
Although the United States Securities and Exchange Commission (SEC) has not yet approved several spot Bitcoin exchange traded fund applications submitted earlier during the year, BlackRock has filed for another crypto ETF, a spot ETH ETF.
Now, in this article we look at the impact of BlackRock’s spot Ethereum ETF filing on the price of ETH and its transaction fees.
BlackRock Files ETH ETF in the United States
On 9 November, BlackRock submitted a spot Ethereum exchange traded fund (ETF) application to the United States Securities and Exchange Commission (SEC). In fact, NASDAQ filed the 19b-4 form on behalf of BlackRock, the leading asset management firm valued at $9 trillion.
The proposed ETH ETF called iShares Ethereum Trust signals BlackRock’s ambition to increase the number of spot crypto ETFs, after filing for a bitcoin ETF that is awaiting approval from the SEC. On the same date the company acquired the BlackRock iShares Ethereum Trust in Delaware as a preliminary step towards applying for an ETH ETF.
Contextually, BlackRock’s iShares is the name of its ETF division. In June it used the same division to register its Bitcoin ETF. Such developments show the asset management firm’s commitment to cryptocurrencies.
The involvement of BlackRock in the crypto space has much weight considering that it is the world’s largest asset management firm. If approved, spot crypto ETFs will attract much financial investment. It is essential to note that a spot crypto ETF is a better investment asset than a futures-based ETH or bitcoin ETF.
Of course, the spot Ethereum ETF is a regulated investment vehicle that gives investors exposure to Ether without holding it. For the asset management firms the ETH ETF has an edge over BTC ETF in that they can stake the ETH that backs the spot ETH ETFs.
ETH’s Price Surged to $2,100
Following the data shown on Gate.io the ETH price surged to $2,100 after the ETH ETF filing. That was a result of ETH investors who pumped the market resulting in the price of the altcoin attaining a nearly 6-month high. Basically, the BlackRock Ethereum ETF rally enabled ETH to break the $2,000 resistance level.
Momentum has been building in the cryptocurrency sector as a result of the spot bitcoin ETF applications filed by several asset management firms including, BlackRock and Fidelity. Now, BlackRock’s filing for a spot ETH ETF indicates institutional appetite for crypto derivatives.
According to a prominent analyst, Ali, the whale activity may further fuel the altcoin’s price momentum. Ali said “Ethereum has reclaimed the $2,000 threshold, and intriguingly, this is all happening before whales have even started buying $ETH!”
Nonetheless, the price of ETH may retrace due to the activity of ETH investors who entered long positions at $1,900 and may want to sell their holdings when its value surpasses the $2,000 price level.
A crypto analyst Pentoshi, with over 711K followers on X, commented on the recent ETH price movement. He/she said, “A few thoughts on $ETH here: It didn’t come this high to not take out the yearly highs at the very least. Might let some shorts build up first in that area though to build liquidity.”
The analyst added, “If $BTC etf is approved, good chance ETH rallies harder.”
However, Santiment has pointed out that the ETH’s recent 38% price rise within the last four weeks was not only a result of the momentum arising from crypto ETF applications. It was also a result of its network expansion. For instance, it recently recorded over 100,000 new ETH addresses that hold more than 0.1 ETH.
After BlackRock filed paperwork for spot Ethereum ETF the prices of several other cryptocurrencies increased as well. As an example, bitcoin attained a new 18-month price high of $38,000, up from $35,000 within the same day. However, later on in the day its price retraced to $36,300.
The ETH’s recent price surge has enabled it to gain greater market dominance than before. As a fact, its dominance increased by 1.3% percentage points to stand at 17%. Despite the hype on ETFs, it may take time for ETH ETF approval to take place since the SEC is taking a cautious approach on these crypto derivatives.
Significantly, many crypto ETFs still await the SEC’s approval. As we may know, the SEC has not yet approved a single spot crypto ETF. Instead, the United States has several crypto futures based ETFs.
ETH Gas Spiked to $270 Gwei
On Thursday, 9 November, although the market was celebrating ETH’s sudden price surge a disheartening development occurred. The Ethereum gas fees spiked to 270 Gwei, reaching a level that was last witnessed in June 2022. The transaction fees spike was a result of high demand for ETH.
The sharp increase in the ETH transaction fees affected the cost of trading swaps. Specifically, the traders had to pay between $60 and $100 per transaction. Notably the increase in the gas fees was a result of the BlackRock ethereum ETF rally that led to much demand for the coin leading to network congestion.
Such a scenario indicates the challenge the Ethereum blockchain currently faces, that of network congestion and scalability. However, we know that the Ethereum development team continues to explore solutions to the problems, including Ethereum 2.0.
SEC’s Possible Objection to Surveillance
BlackRock has one key aspect which may influence the SEC to approve its crypto ETFs. It is the surveillance-sharing agreement with Coinbase which will help to detect fraudulent activities in the spot market.
To this effect, the filing states, “Either CME surveillance can detect spot-market fraud that affects both futures ETFs and spot exchange-traded products, or that surveillance cannot do so for either type of product.”
It added, “Having approved ETH futures ETFs in part on the basis of such surveillance, the Commission has clearly determined that CME surveillance can detect spot-market fraud that would affect spot ETPs, and the Sponsor thus believes that it must also approve spot ETH ETPs on that basis.”
That surveillance agreement is likely to give the SEC confidence in BlackRock’s potential to run an Ethereum ETF with little chance of market manipulation. This is because Coinbase is a respected and established regulated crypto market.
The ETH price surged on 9 November following BlackRock’s filed paperwork on spot Ethereum ETF. The Ethereum ETF rally resulted in ETH breaking the $2,000 resistance level to reach $2,100. However, this price surge was accompanied by a temporary spike of ETH gas fees to around 270 Gwei. In the meantime, BlackRock believes it has met the SEC’s basic spot Ethereum approval requirements.