Ethereum (ETH), the second-largest cryptocurrency by market cap, has jumped by 17% following news that its exchange-traded fund (ETF) has higher odds of being approved by the U.S. Securities and Exchange Commission (SEC).
On May 20, Ethereum saw a significant rise, currently trading at $3,658 with a 24-hour trading volume of $37 billion. This surge came after Eric Balchunas, a senior analyst at Bloomberg, increased the likelihood of Ethereum ETF approval from 25% to 75%.
Balchunas suggested that the SEC’s accelerated pace in approving ETFs might be due to political pressure, as the agency had previously shown little engagement with ETF applications.
He also mentioned that the SEC appears to be encouraging exchanges like the NYSE and Nasdaq to update their filings, though there has been no official confirmation from the regulator.
Nate Geraci, co-founder of the ETF Institute and president of the ETF Store, noted that the final decision on the registration requirement for individual funds (S-1) is still pending.
Geraci explained that the SEC could approve the exchange rule amendments (19b-4s) separately from the fund’s registration (S-1), which could potentially be delayed beyond VanEck’s Ethereum spot ETF request deadline of May 23.
This potential delay would give the regulator more time to review and approve these documents, considering the complexities and risks associated with Proof-of-Stake (PoS) cryptocurrencies.
The SEC has already been examining whether ether, the main asset of the Ethereum blockchain, is a security. This investigation began after Ethereum transitioned from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.
If the SEC decides that ether is a security, it might reject the spot ether ETF applications.
Analysts at QCP Capital believe that the current low interest in the market, combined with the approval of a spot Ethereum ETF, could trigger a short squeeze, potentially pushing ETH back to its recent high of $4,066, recorded on March 12, according to CoinMarketCap data.
Summary Review: The increased likelihood of Ethereum ETF approval has driven a significant price surge, reflecting optimism in the market. However, the final decision by the SEC and the classification of ether as a security remain crucial factors that could influence the future trajectory of Ethereum’s price and its ETF approval prospects.
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