Cryptocurrencies witnessed a robust surge on Tuesday, buoyed by mounting optimism surrounding the Securities and Exchange Commission’s (SEC) impending verdicts on spot Ethereum exchange-traded fund (ETF) applications, with the initial decision anticipated this week. Market observers eagerly await the potential implications of such approvals on Ethereum’s market dynamics.
Developments in the Ethereum ETF Saga
Tuesday’s crypto upswing, led prominently by Ether, the world’s second-largest cryptocurrency, saw a remarkable uptick of over 22%, propelling its value to $3,781.
Fueling speculation further, a report from CoinDesk, citing informed sources, indicated that the SEC had urged exchanges to expedite their 19b-4 filings, hinting at a potential nod for these applications before a pivotal deadline on Thursday.
However, the report cautioned that such actions do not equate to guaranteed approval of Ethereum ETFs.
Before these products can commence trading, issuers must secure approval for their S-1 applications. Notably, the SEC retains the discretion to prolong the review process for S-1 documents, unconstrained by any specific timeline.
Reports suggest that one company in discussions with the SEC has expressed optimism about the possibility of approval, signaling a notable shift from earlier apprehensions regarding SEC delays.
Bloomberg Intelligence ETF analysts revised the odds of spot Ethereum ETF approval from 25% to 75% following indications of a potentially more favorable regulatory stance by the SEC.
The broader cryptocurrency market mirrored Ethereum’s price surge, with Bitcoin marking a 6% increase on the day, accompanied by respective jumps of 5.8%, 6.9%, and 10.3% for XRP, ADA, and DOGE.
Implications and Forecasts
Antoni Trenchev, co-founder and managing partner of Nexo, commented, “This sudden flip in expectations is an unexpected boon for investors who have been crying out for a driver after the [Bitcoin] halving passed and bitcoin ETFs were launched in the U.S. and Hong Kong. If the spot ETH ETFs are approved, altcoins should take off as ether is often a leading indicator for the rest of the crypto market.
The potential approval of Ethereum ETFs signifies notable progress, diverging from prior forecasts that anticipated SEC denial due to concerns over the intricate nature and regulatory challenges associated with Ethereum compared to Bitcoin.
Bernstein analysts noted that given Bitcoin’s 75% surge post-ETF approval, a similar trajectory could be expected for Ethereum prices. They highlighted Ethereum’s attractive supply dynamics compared to Bitcoin, emphasizing its deflationary nature and unique features such as locked staking and financial smart contracts.
Earlier prognostications by Standard Chartered analysts anticipated SEC approval of Ethereum ETFs by May 23, aligning with the timeline of Bitcoin ETF approvals in January 2024. The bank projected substantial inflows for Ethereum, estimating holdings between 2.39 and 9.15 million ETH in the first year post-approval, translating to $15 to $45 billion. In line with their forecast of Bitcoin reaching $150,000 by end-2024, they envisaged an Ethereum price hovering around $8,000.
