Altcoins
What they mean for Solana and other Altcoins
- The recent approval of the ETH ETF is said to have caused a massive revolution among altcoins with OG L2 and DeFi expected to rise.
- 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 triggered a short-term rally, forcing it Bitcoin in the $70,000 region and Solana back in the $180 region. However, several external factors highlighted by Crypto News Flash have tipped market sentiment against bullish continuation, causing assets to stabilize just below critical resistance levels. Interestingly, analysts believe that approval of S-1 registration statements would trigger another rally to set new all-time high prices.
If this happened, altcoins would surely dominate the market, as witnessed when Bloomberg analysts revised their chance of approval from 25% to 75%. At that time, ETH surged 20% to above $3,800, underscoring the importance of this development for decentralized finance (DeFi) over the spot approval of the Bitcoin ETF. To the analysts, the approval of the BTC ETF has sealed its status as an institutional asset, however, the ETH ETF would legitimize the altcoins and prepare them for new highs in the next bull market. Beyond that, one analyst expects this green light to trigger a rally in L2 and DeFi OG.
In support of this point the following can be mentioned Ethereum layer-2s, including Optimism and Arbitrum, experienced similar price movements to ETH as the market recovered following the related ETF approval. Predictably, DeFi OGs like Uniswap or Aave have had similar price movements, recording high double-digit percentage price increases due to their direct ties to EVM technology.
Greater impact of ETH ETFs on Altcoins
Furthermore, the full take-off of Ether ETFs is expected to impact EVM-ready projects. This implies that Avalanche and Polygon have a better chance than Algorand in the next bull run. The reason is that EVM compatibility would become a more crucial topic than it has ever been in previous years, considering the fact 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 to mainstream adoption thanks to the simplicity and flexibility unlocked by Ether ETFs. According to analysts, projects that provide the most functional utility would benefit the most. This creates huge potential around DEXs like SushiSwap or Balancer and lending/borrowing protocols, like Aave and Compound.
Unfortunately for Ethereum competitors like Solana, analysts believe they would face enormous difficulties in the post-ETH ETF environment. Regardless, Solana would still hit all-time highs as the spot ETH ETF created the clarity needed for decentralized blockchains.
For technological developments like the zero-knowledge proofs that power many of Ethereum’s layer 2s and Real-World Asset (RWA) tokenization experiments, there would be a huge revolution for them. According to analysts, the approval of the ETH ETF would cause more projects to build on Ethereum with some transition from L1 rollups to Ethereum rollups. Among all this, investors have been advised to do their research before investing in any project. Beyond that, they must avoid getting caught up in the excitement and momentum when the market stages a bull run.
At the time of writing, ETH was trading at $3,827, having fallen 1.78% in the past 24 hours.