Cardano Jumps 11% as Grayscale Files for First-Ever ADA ETF

Cardano's cryptocurrency, ADA, surged by 11%, overtaking Bitcoin and Ethereum following Grayscale Investments' application for the first spot ADA exchange-traded fund (ETF) in the United States. On CoinDesk, ADA saw an increase to $0.80 starting late Wednesday. Despite this rally, ADA, the ninth-largest cryptocurrency by market cap, remains 36% below its December peak of approximately $1.37.

Grayscale, a leading crypto asset management firm, has filed for the first spot ADA fund on the New York Stock Exchange.

This type of ETF would allow investors to gain exposure to ADA without requiring direct ownership. Last year, spot ETFs for bitcoin and ether debuted in the U.S., drawing billions in investments and promoting the story of growing institutional acceptance. The SEC approved spot BTC and ETH ETFs largely relying on the CME's futures surveillance system to address concerns over price manipulation, suggesting that CME futures were necessary for spot ETF approval.

Notably, CME has yet to list ADA futures. Nonetheless, the ADA price surge indicates market optimism despite this fact.

According to analytics firm Santiment, there appears to be a growing shift in investor interest from memecoins to Layer 1 cryptocurrencies, such as BTC, ETH, SOL, and ADA, which may continue to sustain their market support. “The crypto community is increasingly turning to Bitcoin and other Layer 1 assets, including Ethereum, Solana, Toncoin, and Cardano,” Santiment commented, noting that these leading Layer 1 cryptocurrencies account for 44.2% of discussions around specific coins. Meanwhile, attention towards memecoins like Dogecoin, Shiba Inu, and Pepe is dwindling across social media platforms. "This shift from memecoins to Bitcoin and Layer 1 assets generally indicates a more stable and sustainable market environment," the firm added.

Bitcoin remains largely stable within a trading range of $95,000 to $100,000, with potential gains restricted by concerns over trade wars and increasing inflation expectations in the U.S. Similarly, ether has been trading between $2,500 and $2,900 after recovering from a recent dip to $2,000 on various exchanges. With macro traders gravitating towards gold, pushing its prices to record highs above $2,900 per ounce, bitcoin is eyed for its alternative value proposition.

Despite current volatility, some analysts remain optimistic about bitcoin's potential.

Analysts from Bitfinex emphasized that, "The recent price stability, alongside gold's rising appeal, should underscore Bitcoin's increasing value as an alternative store of value. Despite short-term volatility, Bitcoin’s fundamental narrative continues due to rising institutional interest and its potential role as a hedge against inflation and currency devaluation." They further noted, "A transition away from gold may be underway, as ETFs, public and private companies, and nation-states now hold over $196 billion in Bitcoin. With central banks increasing money supply and fiat currency devaluation risks, Bitcoin's fixed supply proposition is becoming increasingly compelling."

Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or legal advice. Always conduct your own research or consult a professional when dealing with cryptocurrency assets.