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The launch this week of ProShares Bitcoin Strategy exchange traded fund (NYSE:BITO), the first full-fledged cryptocurrency ETF offered in the U.S., sent Bitcoin skyrocketing to a new all-time high above $66,000.
In the last 30 days, Bitcoin’s price has risen 40%.
By contrast, the price of Ethereum, the second-largest cryptocurrency by market value, has risen only 3% in the past week to $3,987.56. While Ether’s overall growth remains strong with a 445% year-to-date gain, the digital token has clearly been placed in the shadow of the much larger Bitcoin that is once again in the investing world’s spotlight.
The ProShares Bitcoin Strategy ETF has been, by all accounts, a resounding success having accumulated more than $1 billion of assets in the two days after it began trading on the New York Stock Exchange.
The U.S.-based Bitcoin ETF’s launch was met with huge demand, ranking as the second heaviest-traded ETF debut on record. Data showed inflows of $567 million U.S. in its very first day of trading.
That success has many on Wall Street and beyond speculating that an ETF focused on Ethereum futures will also be approved in the coming months. There are currently about five applications for Ethereum ETFs in the U.S.
Up in north in Canada, three Ethereum ETFs have already been approved and are actively traded on the Toronto Stock Exchange. Each of the Canadian ETFs invests directly in Ether, the cryptocurrency used on the Ethereum network, which is today the most actively used blockchain network in the world.
To date, the Canadian Bitcoin and Ethereum ETFs have proved to be extremely popular. So popular that earlier in October, the first-ever ETF that combines both Bitcoin and Ether launched in Canada.
The Evolve ETF trades under the ticker “ETC” on the Toronto Stock Exchange and is the first multicurrency ETF. It combines the world’s two largest cryptocurrencies weighted by their market capitalization, which is roughly 67% Bitcoin and 33% Ethereum.
There’s no question that the launch of a U.S.-based Ethereum-based ETF would be a huge boost to the second biggest cryptocurrencyProof of Work Protocol
Ethereum stands out in the crypto universe for its utility. While most digital coins and tokens have no purpose at all, Ethereum serves many functions.
It is used in decentralized applications (dApps) such as non-fungible tokens (NFTs) and is a foundation for decentralized finance (DeFi), which facilitates transactions without the need for a bank or traditional financial institution.
Ethereum also hosts smart contracts that enable people to execute safe and secure agreements without help from a lawyer. This utility is the reason why Ethereum’s price today hovers near $4,000, and why it is widely regarded as one of the more legitimate cryptocurrencies.
One drawback with Ethereum has been that it uses a “proof of work” mining protocol that requires a great deal of power. Essentially, cryptocurrency miners use high-powered computers to solve puzzles and verify transactions involving Ether.
The power required to mine Ether has been a knock on the digital token, with environmentalists heavily criticizing its impact on Mother Earth.
However, Ethereum developers are responding to the criticism by transitioning to a “proof of stake” protocol that is more environmentally friendly. With a proof of stake protocol, miners put some of their own cryptocurrency holdings at stake to verify transactions.
Ether Is Worth The Gamble
The cryptocurrency market remains young, speculative and volatile. That said, there are a few digital coins and tokens that are emerging as legitimate investors worthy of capital. One of these is Ethereum.
With its multi-purpose function and future potential, Ether is the second-largest cryptocurrency for a reason. While its growth in recent weeks has been overshadowed by Bitcoin, it likely won’t be long before Ethereum again rallies to new highs itself.
Some analysts are forecasting a $10,000 price target for the cryptocurrency. With a potential Ether ETF on the horizon, now is as good a time as any for investors to roll the dice on Ethereum. Right now, Ether is a buy.
Disclosure: On the date of publication, Joel Baglole 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.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.