Bitcoin ETFs were one of the most anticipated and influential events of 2023 in the cryptocurrency market. They’re anticipated approval drove up prices for Bitcoin and with Bitcoin ETFs now available investors are looking for the next newest thing.
That next newest thing is likely to be ethereum ETFs. investors are currently confronted with mixed news about their potential approval. On the one hand, expectations are that Ethereum ETF approvals could come as soon as May. Meanwhile, TD Cowen anticipates that Ethereum ETF approvals won’t occur until after the election.
However, Bloomberg ETF analysts have pegged the odds of a May approval for Ethereum ETFs at 70%. That alone should be enough reason for investors to consider these cryptos at the moment.
Ethereum (ETH-USD)
Ethereum (ETH-USD) is the most obvious target for investors in anticipation of the approval of Ethereum ETFs. Those same investors will be looking to the increase in price of Bitcoin in the lead up to the approval of Bitcoin ETFs.
Potential Ethereum ETF approval is an easy to understand catalyst. But it’s really just one more reason to consider investing in Ethereum. Ethereum is arguably the best overall cryptocurrency investment one can make.
It is extremely utilitarian due to its dominance over the smart contract space. It dominates the decentralized app (dApp) space and Ether essentially acts as digital oil for the Web3 age. In short, ethereum is integral to the continued development of the cryptocurrency space. Its smart contracts are ubiquitous throughout the various blockchains there in and ether is central to dApps.
The next few months promise to benefit ETH and send its prices higher. Ethereum will continue to have the potential to increase for many reasons and is arguably the strongest cryptocurrency available to investors.
Arbitrum (ARB-USD)
Ethereum ETF approvals benefit Arbitrum (ARB-USD) and others like it, giving them huge potential. Arbitrum is one of many so-called layer 2 crypto projects. Layer 2 or (L2) solutions came about as a result of the rapid growth and adoption of Ethereum.
Ethereum became too popular for its own good in a sense. The project simply didn’t have enough bandwidth to handle all of the traffic that was drawn to the project. That led to scalability issues due to slower processing times.
Those issues, though, led to opportunities for L2 solutions projects like Arbitrum. They essentially process transactions in Ethereum but do so off of its main blockchain. So, this leads to a logical question: why should investors think that Arbitrum will become more valuable in the immediate near future?
The answers is obvious if you think about it: Anticipated Ethereum ETF approvals will serve to spike demand thus increasing throughput in L2 solution blockchains like that of Arbitrum.
Loopring (LRC-USD)
Loopring (LRC-USD) Is another layer 2 solution to consider in the coming months. In fact, this entire article is heavily populated by L2 solutions. Loopring is a well-noted project in that regard and will undoubtedly receive a lot of attention over the coming weeks and months for that reason.
So, what does Loopring do? Aside from simply helping to decongest Ethereum’s network, Loop ring is also an Automated Market Maker (AMM). That means It is an automated mechanism that utilizes code to ensure contractual obligations are met. In other words, AMMs ensure that the human element is eliminated from trade facilitation.
That makes Loopring interesting to investors who particularly focus on the idea of decentralization. The greater the level of automation, in their minds, the better. Those factors make Loopring inherently interesting at the moment.
Everything that is closely connected to Ethereum will be under the microscope over the coming months. Projects like Loopring that are positively associated with ETH have a strong chance to increase in price.
Optimism (OP-USD)
Optimism (OP-USD) is yet another L2 solution for the Ethereum network. It helps by recording transactions on the Ethereum network which are ultimately secured there. So, the same argument applies here: Optimism’s price is well positioned to rise as interest around Ethereum ETFs rises over the near term.
A quick point about Optimism’s functionality and transaction duration. Transactions are recorded on the optimism blockchain and ultimately processed on Ethereum’s network. Those transactions are submitted to Ethereum for processing on the L1 network and can be challenged for a period of 7 days before being finalized.
I’d argue that that ultimately benefits Optimism for the simple fact that it provides an extra level of security. Further, many pundits believe that the optimism network is inherently secure due to transactions ultimately being processed through Ethereum. Ethereum itself is widely regarded as being highly secure. Overall, it is another strong choice as Ethereum scalability demands increase due to the approval of Ethereum ETFs.
Polygon (MATIC-USD)
Polygon (MATIC-USD) is deeply connected to Ethereum for the same reason as so many other projects on this list: L2 Solutions and their utility in relation to scalability.
It is also one of the most prominent cryptocurrencies overall and currently is the 15th most valuable project overall. Perhaps metrics are the best place to begin in discussing Polygon in relation to Ethereum ETF rumors.
Polygon boasts a speed of up to 65,000 transactions per second and evolved as a response to Ethereum’s slow speeds. It takes 2 seconds to confirm a block using Polygon at a cost of approximately 1 cent per transaction.
Ethereum is here to stay, and as long as it continues to face scalability problems Polygon and others like it will continue to have strong potential.
Another important metric to consider is total value locked or TVL. It is widely considered to be a measure of developer interest overall. That’s a particularly strong indication for Polygon which benefits from a TVL approaching $1 billion at present.
Shiba Inu (SHIB-USD)
Shiba Inu (SHIB-USD) has received a lot of negative press over its lifetime due to its perceived lack of utility and meme status. I’ve certainly contributed to that, having recommended avoiding the cryptocurrency many, many times in the past.
However, I, like many others, may have overlooked a particularly important truth.That truth is that Shiba Inu has developed some utility with its Shibarium L2 project. It’s also a development that has gone relatively unnoticed in the world of cryptocurrency.
Shiba Inu added L2 functionality to its network in August of 2023. While the transition was noted by Shiba Inu enthusiasts, it did not result in a particularly noticeable spike in prices or much coverage overall.
The transition raises an obvious question: Is Shiba Inu a project to watch again due to its increased functionality? While it’s just about impossible to confidently assert that L2 functionality will propel Shiba Inu and provide rapid results, it’s worth considering. It’s logical to assume it could receive much more attention in the coming weeks due to that functionality and rumors around Ethereum ETFs.
The SandBox (SAND-USD)
It is reasonable to anticipate that The SandBox (SAND-USD) may well experience a spike in interest beginning in early February.
Apple (NASDAQ:AAPL) will release its Vision Pro augmented reality headset on Feb. 2. Its release could very well galvanize a surge of renewed interest in all things metaverse. If that occurs it will be a very welcome event for The SandBox.
If you’ll remember, The Sandbox is a blockchain based virtual world that came to a prominence during the pandemic. It is one of the leading metaverse cryptocurrencies and the release of augmented reality headsets is likely to renew interest around it.
The SandBox is related to Ethereum in that It runs on ETH and is an Ethereum-based Metaverse game. It is therefore easy to argue that The SandBox has many positive factors behind it that could easily act as tailwinds.
Renewed interest in the metaverse is a near certainty in 2024 and that alone should give investors reason to reconsider SAND-USD.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
