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Ethereum price recorded a 17% increase following the speculation of potential approval of spot Ether ETFs. What happens next?
On May 20, the value of Ethereum, the second-largest cryptocurrency by market cap, jumped 17% against the U.S. dollar. This surge was fueled by speculation that the U.S. Securities and Exchange Commission (SEC) might greenlight several spot Ether exchange-traded funds (ETFs).
Ether ETF Market Speculation Drives Price to $3,700
ETH price surged from $3,144 to $3,668 per coin, with a 24-hour market volume of $38.2 billion. ETF analysts James Seyffart and Eric Balchunas fueled the speculation, increasing their approval odds for a spot Ether ETF from 25% to 75%.
In a post on May 20, Eric Balchunas shared insights into the SEC’s handling of spot Ether ETF applications. Balchunas suggested that the SEC is likely experiencing political pressure, which may influence its decision-making process.
Update: @JSeyff and I are increasing our odds of spot Ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue), so now everyone scrambling (like us everyone else assumed they'd be denied). See… https://t.co/gcxgYHz3om
— Eric Balchunas (@EricBalchunas) May 20, 2024
Balchunas explained that the SEC has allegedly asked major exchanges such as the NYSE and Nasdaq to update their filings related to spot Ether ETFs. While unconfirmed, this move could respond to market and political pressures. James Seyffart shares Balchunas’ cautious optimism, noting that these developments are closely watched by the cryptocurrency community, especially Ethereum enthusiasts.
Things are taking a turn for the better on Spot #ethereum ETF approvals this week. Upping our odds to 75%. https://t.co/3WJ8kx9d8k
— James Seyffart (@JSeyff) May 20, 2024
Seyffart expects an influx of updated filings in the coming days, aligning with the increased likelihood of approval. This anticipation is based on the signals they receive, suggesting a more favorable regulatory environment for these financial products.
As previously reported, the SEC is investigating whether Ether, the primary native asset of the Ethereum blockchain, meets the definition of a security. This formal inquiry was initiated following Ethereum’s transition from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) mechanism.
If the SEC ultimately classifies Ether as a security, this designation could provide major grounds for spot Ether ETF rejections.
Spot Ether ETF Potential Approval Drives Futures Open Interest to $14B
Ether futures have surged in popularity following a sudden positive shift in sentiment regarding the potential approval of spot Ether ETFs in the U.S.
According to data from Coinglass, the dollar value locked in active Ether futures contracts climbed 25% to a record $14.05 billion in the past 24 hours, surpassing the previous peak of $13.2 billion set on March 15.
This increase indicates a fresh wave of investment into the Ether market, primarily from optimistic investors, as the second-largest cryptocurrency by market cap saw a 17% price growth. The concurrent rise in open interest and price is often viewed as a strong indication of a bullish trend.
The SEC is scheduled to decide on the VanEck spot Ether ETF on May 23. For Ether ETFs to commence trading on stock exchanges, the SEC must approve the 19b-4 filings and the S-1 registration statements.
