Bitcoin and Ether Differences ETF Investors Should Know

The Ethereum network made headlines last week with the SEC’s surprise rule change approval, opening the door for ether ETF approvals. While potential spot ether and spot bitcoin ETFs share some similarities, foundational differences in the two cryptocurrencies make for very different use cases for investors.

The SEC approved applications from several exchanges seeking to list and trade spot ether ETFs on May 23, 2024. These exchanges include Nasdaq, NYSE Arca, and CBOE BZX. Collectively, eight ETFs are currently awaiting S-1 approvals, which could take weeks or months, with no guarantee that all will eventually launch. Ether would be the second spot cryptocurrency to garner mainstream investment approval from the regulatory agency this year.

Bitcoin and Ether: Few Similarities, Many Differences

Ether and bitcoin are both cryptocurrencies and tokens of their native platforms (Ethereum and Bitcoin respectively). Considered high-risk investing due to their heightened volatility and arguably speculative nature, in reality, the two offer very few similarities. The ether token (ETH) is used to power the Ethereum blockchain, a decentralized platform and technology hub. On the other hand, bitcoin (BTC) is seen generally as a store of value.

See also: “What Do Advisors Think About Ethereum?

The Ethereum platform is home to smart contracts that don’t require third-party validation, as well as decentralized applications (DApps). Nonfungible tokens (NFTs), decentralized finance (DeFi) applications, and tokenization of real-world assets all happen on the Ethereum network. DApps leverage smart contract capabilities while using ether tokens as payment. All transactions on the network incur ETH fees (called gas), meaning ether powers the platform. As such, ether investors often consider it an investment in the underlying technology.