Ethereum Gains Whopping 17%: What Caused the Surge?

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Key Takeaways

  • Ethereum's price surged 17% due to speculation that the SEC may approve spot Ether ETFs.
  • Analysts increased the approval odds for spot Ether ETFs from 25% to 75%, driving ETH's price to $3,668.
  • Open interest in Ether futures contracts reached a record $14.05 billion, indicating a bullish trend amid ETF approval speculation.

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%.

ETH Price recorded 17% | Source: CoinMarketCap
ETH Price recorded 17% | Source: CoinMarketCap

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.

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.

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.

Coinglass data on Ether Futures Contracts
Coinglass data on Ether Futures Contracts

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.