Ethereum (ETH), the second-largest cryptocurrency by market capitalization, experienced a notable surge of 17%, reaching $3,658 with a 24-hour trading volume of $37 billion.
This rise came after Bloomberg analyst Eric Balchunas increased the likelihood of an Ethereum exchange-traded fund (ETF) approval by the U.S. Securities and Exchange Commission (SEC) from 25% to 75%.
Balchunas suggested that the SEC might be accelerating its approval process due to political pressure, marking a shift from its previous cautious stance on ETF applications. This potential change in regulatory attitude has fueled optimism among investors.
Nate Geraci, co-founder of the ETF Institute and president of the ETF Store, highlighted that while the SEC is considering exchange rule amendments (19b-4s), the final decision on individual fund registrations (S-1s) is still pending.
This means that while exchanges like NYSE and Nasdaq might revise their filings as encouraged by the SEC, the approval of these ETFs could still face delays.
The SEC’s ongoing evaluation of Ethereum, especially after its transition from a proof-of-work (PoW) to a proof-of-stake (PoS) mechanism, adds another layer of complexity.
If Ethereum is classified as a security, the SEC may reject the spot ether ETF applications, significantly impacting market dynamics.
QCP Capital analysts believe that despite the current market’s lack of enthusiasm, the approval of a spot Ethereum ETF could trigger a short squeeze, potentially pushing ETH back to its highs of March 12, when it traded at $4,066.
The decision on VanEck’s Ethereum spot ETF request, expected by May 23, remains a critical date for investors.
While there is optimism, the regulatory process’s intricacies suggest that further delays are possible, providing the SEC more time to thoroughly assess the risks associated with Ethereum’s PoS system.
