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As March 10 draws near, the cryptocurrency world is abuzz with anticipation over the US Securities and Exchange Commission’s (SEC) upcoming decision on the much-awaited spot Ethereum ETF.
The SEC had a 45-day window from November to approve or deny Fidelity’s spot Ethereum ETF filing, meaning January 25, but recently delayed making the decision by another 45 days (PDF) to March 10.
We may still need to wait, however, as other analysts expect further delays to push back approvals or rejections to May. A decision on Blackrock’s spot ETF filing is currently expected on May 23.
When the first decision — positive or negative — arrives, it could mark a significant turning point in the trajectory of Ethereum and potentially set a precedent for the broader crypto market.
Key Takeaways
- The SEC’s decision on March 10 regarding Fidelity’s spot Ethereum ETF is highly anticipated, with significant implications for the future of ETH and broader cryptocurrency market acceptance.
- However, some analysts expect further delays in the decision-making process and point to May as the next window for possible approval.
- Despite intense market demand and optimism from industry experts, regulatory uncertainties and the SEC’s cautious stance on crypto ETFs, particularly concerning Ethereum’s classification as a commodity or security, present major hurdles to approval.
- Major financial players like BlackRock and Fidelity are key stakeholders in the potential approval of an Ethereum ETF, while external factors like Celsius’s recent large Ethereum transfers add complexity to the market’s anticipation and potential price implications.
The path to approval is fraught with regulatory complexities; indeed, the SEC, still silent on whether it deems Ether a security, only narrowly approved a spot Bitcoin ETF.
The SEC Chair Gary Gensler’s vote was critical to the spot Bitcoin ETF approval, but he clarified that this should not be seen as an endorsement of crypto assets or a sign of readiness to approve similar products.
Despite these challenges, there’s a sense of cautious optimism in the air.
The Case for Bullish Sentiment
Industry experts like Matt Kunke of GSR and Philippe Bekhazi of XBTO are betting on an Ethereum ETF approval this year.
They draw parallels to the journey of Bitcoin ETFs, suggesting that Ethereum’s regulated futures on the CME and the recent Court of Appeals victory for Grayscale point towards an inevitable approval.
“I strongly believe that we’ll see the approval of a spot Ethereum ETF this year,” said Bekhazi.
“Bitcoin and Ethereum are both listed and regulated futures on CME and are likely considered pretty equal in the eyes of the SEC.
“Additionally, if market conditions remain strong, further pressure will be applied to make the asset accessible to institutions. Approval is definitely a question of when not a question of if.”
Bloomberg Intelligence’s James Seyffart, although slightly more conservative, still places the odds above 50%.
“We believe the odds of approval are over 50% but not nearly as confident as we were about the Bitcoin ETFs,” says Seyffart.
He also cautions that delays are likely, possibly pushing decision day to May 23.
Spot Ethereum ETF Delays will continue to happen sporadically over the next few months. Next date that matters is May 23rd https://t.co/2zBBvHkrVk
— James Seyffart (@JSeyff) January 24, 2024
The Case For Bearish Sentiment
Contrarily, some analysts remain skeptical. Anthony Scaramucci of SkyBridge Capital highlights the SEC’s reluctance to broadly embrace crypto assets.
Similarly, JPMorgan’s analysis suggests the SEC’s classification of Ethereum as a commodity, not a security, is crucial and not guaranteed.
TD Cowen echoes this sentiment, expecting the SEC to observe Bitcoin ETFs’ performance before venturing into Ethereum or other crypto tokens.
BlackRock, Fidelity, and Celsius in the Spotlight
The spotlight is also on major players like BlackRock and Fidelity, who have submitted their applications for Ethereum ETFs. Delays in decisions on these applications, as noted by Seyffart, add to the uncertainty.
The SEC’s extended timeline for BlackRock’s iShares Ethereum Trust and Fidelity’s Ethereum Fund underscores the cautious approach being taken.
Adding to the mix is Celsius’s recent transfer of $1 billion in Ethereum, which has raised eyebrows and intensified market speculation.
This move could potentially influence ETH’s price, either by triggering selling pressure or by bolstering creditor confidence.
Despite these challenges, the general consensus among experts is that it’s a matter of time before a spot Ethereum ETF sees the light of day.
This sentiment is bolstered by Ethereum’s developments, including the upcoming Dencun upgrade, which is expected to positively influence Ethereum’s narrative and price trajectory.
The Bottom Line
As we work through the first quarter of the year, the crypto community remains on tenterhooks, eagerly awaiting the SEC’s decision.
The approval of a spot Ethereum ETF could be a watershed moment for Ethereum and the broader crypto market, symbolizing a significant step toward mainstream acceptance.
However, the path is riddled with regulatory hurdles and market uncertainties, the outcome of this decision will not only shape Ethereum’s future but also set a critical precedent for the entire cryptocurrency sector.
