Anticipation Around Ether ETFs Fuels Crypto Rally

The US SEC is likely to approve spot Ethereum ETF applicants now, four months after similarly approving Bitcoin ETF applicants.

Early this year, the US Securities and Exchange Commission (SEC) granted approval to eleven spot Bitcoin (BTC) exchange-traded funds (ETFs) after months of tug-of-war. Four months later, the market is now rife with speculations around the SEC approving the applications of spot Ethereum (ETH) ETFs. 

In a positive development, the anticipation around ether ETFs has fueled a crypto rally of late. ETH soared more than 20% over the last four days, trading at $3,668.24 at writing time. It tends to surpass the $4k mark, as it did in March. The market’s dominant cryptocurrency also made significant moves. Bitcoin (BTC) surpassed the $71k mark, soaring 8% within a few hours.

Source: BTC/USD, TradingView by BitDelta

BTC is trading at $71,129.50 at press time, only $2k short of its all-time high (ATH) of $73,750.07, which it hit on March 14, 2024. The crypto market's capitalisation grew from $2.4 trillion to $2.6 trillion, marking an 8% rise in the last 24 hours. 
SEC Closer to Greenlighting Spot Ethereum ETHs? 

We know the months-long back-and-forth between the regulating and ETH issuing bodies. But wasn’t it the same case for spot Bitcoin ETFs, too? Applicants waited years before the SEC approved those BTC ETFs earlier this year. Now, the time is ripe for spot Ethereum ETHs to be listed on the US stock exchange. 

Leading Bloomberg analyst Eric Balchunas has also supported the speculation. On 20 May, Balchunas claimed that there is chatter about the SEC approving these ETFs due to “political pressure.” As a result, he and James Seyffart raised their odds from 25% to 75% over the approval of spot Ether ETFs.

The US Senate passed a Congressional Review Act (CRA) to review the SEC Staff Accounting Bulletin No. 121 (SAB 121) only last week. The SEC’s bulletin requires banks to keep customers’ crypto assets on their balance sheets, with capital against them. The crypto industry has severely criticised the directive for allegedly suppressing innovation in the burgeoning industry.

President Joe Biden, meanwhile, has threatened to veto the resolution mentioned above or sign it into law. Leaders from both the Democratic Party and the Republican Party are behind the disapproval, with crypto regulation quickly becoming a bone of contention ahead of the Presidential Elections in November 2024. Under these circumstances, the SEC is negotiating through the political turmoil and has asked the trading exchanges and ETF issuers to update their filing documents. Galaxy Digital founder and CEO Mike Novogratz appreciated the anticipation around ether ETHs. It said that he felt more confident than ever in the last ten years about the institutional adoption of crypto over the next 12-24 months.

VanEck, ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock and Fidelity, have queued up to receive approval to list their spot Ether ETFs on the markets. The SEC is expected to announce its decision about VanEck and Ark Invest's ETF applications this week. If the regulator’s response is positive, it could inspire a positive market sentiment. Both BTC and ETH already intend to cross their previous ATHs, and if things turn around as expected, we will see another round of excitement in the crypto sector worldwide.