The markets are starting to speculate on whether the US Securities and Exchange Commission (SEC) will approve Ethereum ETFs this week, as the deadline for the regulator to either approve or deny the initial round of applications quickly approaches.
The SEC faces a firm deadline of 23 May to decide on VanEck’s Ethereum application, followed closely by ARK Investment Management’s filing with 21Shares, due just a day later.
Amid this speculation, Ethereum has surged to over US$3,600 since Monday, 20 May. This has been its highest value in over a month.
A similarly bullish reaction was observed earlier this year ahead of the SEC’s approval of spot bitcoin ETFs, which saw the price of bitcoin climb from some US$44,000 at the start of January to US$73,135 by the middle of March.
Global X ETFs’ product and investment strategist, Marc Jocum, noted that the recent Ethereum price surge came as a surprise, as previously the market had already factored in much of the anticipation when bitcoin rallied alongside the approval of spot bitcoin ETFs.
“They knew it was potentially coming in January, but the SEC has pretty much done a 180 [with Ethereum]. They’ve said originally it was not going to be approved in May, now they’ve pretty much said there’s a chance a lot of issuers are changing some of the regulatory collateral to potentially get approved,” he told InvestorDaily.
Regarding Ethereum ETFs, he expressed confidence, stating it’s more a matter of “when” than “if”, though he didn’t dismiss the possibility that the SEC might postpone approval further down the line. Presently, market speculation suggests the SEC could sign off the 19b-4 filings this week though it could potentially slow play the next step, which includes S-1 filings, till further down the line.
“There was a spot Ethereum ETF launched in Europe in 2017, in Canada in 2021, and in Australia in 2022. The US is actually behind the eight ball over here, so there might be a bit of pressure on them to approve it sooner rather than later,” Jocum observed.
Speaking to InvestorDaily, Australian digital asset investment manager Magnet Capital said it has upgraded its odds of Ethereum ETF approval from 50 per cent to 85 per cent after rumours of SEC engagement with exchanges overnight.
“US media reports suggest that the SEC has requested revised 19b-4 forms (detailing changes to existing rules, specifically with regard to trading rules) from exchanges by 10am ET tomorrow, based on comments received from the commission today,” explained Benjamin Celermajer, director at Magnet Capital.
“The expectation is that just like the BTC ETF approvals in January, all 9 ETH ETF approvals will come at the same time.”
If approved, the introduction of an ETF could see massive inflows into the cryptocurrency. In the case of bitcoin, the 11 SEC-approved offerings on the market saw approximately $12.1 billion in total inflows by the end of the first quarter of 2024, according to BitMEX Research.
Magnet Capital also forecasts approval could help Ethereum prices cross US$7,000 by the end of the year.
However, Global X’s Jocum holds a more conservative view on where Ethereum prices could land, given the volatility of the asset class.
“What we will see, if the ETFs do get approved and they’re actually there to go out and buy … that could definitely drive up the price a lot higher. How high it can go, that ceiling is a bit unknown,” he said.
He did not rule out Ethereum could surpass its previous record high of US$4,721 in 2021.
“The price could hit US$7,000, sure. Or it could fall down to reach $1,000.
“Considering it’s a volatile asset class, we would advise most people to make it a small part of their portfolio to participate in the upside,” Jocum contended.
