By
Chimamanda U. Martha
April 26th, 2024
The SEC faces deadlines ranging from May 23 to August 7 to make decisions on Ethereum ETF applications.
The crypto market is buzzing with expectations as analysts predict a high likelihood of the approval of Ethereum (ETH) Exchange-Traded Funds (ETFs) in the coming months.
Analysts’ Confidence and Comparisons with Bitcoin
Eric Balchunas, a notable ETF analyst at Bloomberg, has expressed optimism, estimating a 70% chance of approving an Ethereum spot ETF by May. This potential approval could have huge implications for the crypto market, as Ethereum continues gaining attention from institutional and retail investors.
Balchunas draws parallels between Ethereum and Bitcoin, stating that he couldn’t envision a scenario where spot Bitcoin ETFs are approved while spot Ether ETFs are not. He emphasized the interconnected nature of the two cryptocurrencies, noting that “Ether spot is tied to the hip of Bitcoin spot”.
Balchunas, who has reportedly heard positive signals through informal channels, believes that spot Ethereum ETFs “will be fine”. Balchunas’ 70% probability is worth taking note off. This is because the approval odds issued on spot Bitcoin ETFs last year turned out positive.
Adding to the positive sentiment, Digital asset lawyer Joe Carlasare expressed confidence in the eventual approval of Ethereum spot ETFs this year. However, he adds a cautious note, suggesting that the approval process may take longer than expected. Carlasare believes the Securities and Exchange Commission (SEC) is working to establish a precedent that allows it to exercise discretion in determining which digital asset ETFs can enter the market, discouraging a flood of applications for various tokens.
Carlasare anticipates that spot Ethereum ETFs might not commence trading until the third quarter of 2024, contrasting with the optimism of some applicants like Hashdex, which hints at potential trading as early as the second quarter. Notably, the timing of the launch remains uncertain, even though the approval odds are relatively high.
James Seyffart, another Bloomberg ETF analyst, supports the case for spot ETH ETF approvals, pointing out that the SEC implicitly accepted Ether as a commodity when approving Ether futures ETFs in September. The analyst believes this prior acceptance could pave the way for spot Ether ETFs to gain regulatory approval.
Ethereum ETF Application Deadlines
Multiple asset managers, including BlackRock Inc (NYSE: BLK), VanEck, ARK Invest & 21Shares, Fidelity Investments, and Invesco Galaxy, have filed applications for spot Ether ETFs.
The SEC faces deadlines ranging from May 23 to August 7 to make decisions on these applications. If the SEC approves one, it may potentially approve all, similar to the approach taken with spot Bitcoin ETFs.
Meanwhile, the anticipation of Ethereum ETF approval is already influencing the market. Following the recent approval of Bitcoin ETFs, ETH experienced a surge of 7.92% in the past 24 hours, with a notable 17% rally over the past week according to data from CoinMarketCap.
Ethereum’s open interest also rose by 11.52% to $7.81 billion, signaling increased trading activity and a bullish sentiment.
