- Cryptocurrency markets are optimistic about potential SEC approval of Ether ETFs.
- Fidelity has filed for a spot-Ether ETF, addressing classification concerns.
- Analysts estimate $15-45 billion in Ether inflows if spot-Ether ETFs are approved.
Cryptocurrency markets are experiencing a surge of euphoria as optimism builds around the potential approval of exchange-traded funds (ETFs) that invest directly in Ether. The anticipation of Ether ETF approval has sparked a sharp reversal in market sentiment, driven by a flurry of activity involving potential issuers, stock exchanges, and the US Securities and Exchange Commission (SEC).
The SEC has requested updates to the 19b-4 filings from the New York Stock Exchange (NYSE) and Cboe Global Markets, signaling a potential increase in approval prospects. However, a final decision remains uncertain as the SEC has also called for a universal comment, requiring all filings to be resubmitted with uniform language.
Fidelity Updates Ether ETF Proposal
Fidelity Investments has updated its S-1 registration statement for a proposed spot-Ether ETF. Notably, Fidelity has stated it will exclude the Ether it buys from staking programs, which generate rewards for blockchain maintenance, and will avoid investing in derivatives. This decision addresses concerns about whether Ether should be classified as a security.
The SEC’s increased engagement with investment firms and exchanges comes ahead of a crucial May 23 deadline to approve or deny an application from VanEck. Approval would represent significant regulatory relief for the sector, according to analysts from Bernstein, who also noted that the political climate ahead of US presidential elections could influence a more favorable outcome.
Ether ETF Market Impact
Ether, the native token of the Ethereum blockchain, has surged by as much as 25% in recent days, trading around $3,800. Analysts, including Geoff Kendrick from Standard Chartered, predict significant inflows into Ether if spot-Ether ETFs are approved, estimating potential investments between $15 billion and $45 billion within the first year.
The SEC faced a similar situation in January with spot-Bitcoin ETFs, ultimately approving ten funds simultaneously. This approval was preceded by extensive amendments requested by the regulator. The recent increase in paperwork amendments and engagement with the SEC has led some issuers to anticipate a positive outcome for Ether ETFs.
Historical Context and Global Influence
The introduction of Bitcoin ETFs in the US has been a significant success, attracting nearly $13 billion in net inflows and amassing around $59 billion in assets since their launch in January. Additionally, Bitcoin and Ether spot ETFs began trading in Hong Kong on April 30, currently managing $294 million in assets.
Grayscale Investments’ Ethereum Trust (ticker ETHE) is another indicator of growing speculation around ETF approval. The fund recently traded at a roughly 12% discount to its underlying Ether holdings, a notable improvement from previous discounts. This pattern mirrors the behavior seen before the SEC approved the conversion of Grayscale’s Bitcoin Trust.
Analyst Predictions and Market Reactions
Ether prices have climbed since Bloomberg Intelligence ETF analyst Eric Balchunas raised his probability estimate for the ETF’s approval from 25% to 75%. This optimistic forecast has further fueled market enthusiasm and driven up Ether’s price.
The SEC, along with spokespeople from NYSE, Nasdaq, and Cboe, have declined to comment on individual filings. Grayscale Investments has also not responded to requests for comment.
Conclusion
The cryptocurrency market is abuzz with anticipation as the potential approval of spot-Ether ETFs draws near. This development could herald a new era of investment and regulatory clarity for Ether, driving significant inflows and bolstering market confidence. As May 23 approaches, all eyes are on the SEC’s decision, which could have profound implications for the future of cryptocurrency investments.
