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This week brought an unexpected twist. Analysts closely monitoring the SEC’s evaluation of several ethereum ETF applications are now significantly more optimistic about approval. On Monday, Bloomberg analysts increased their approval odds from 25% to 75%.
Ethereum’s price surged 22% on the news, pulling bitcoin up as well. Over the past year, ethereum has climbed 106%, while bitcoin has risen 159% as the crypto winter has thawed.
Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence, told Brew Markets that their team revised their odds after learning the SEC was engaging with exchanges about the funds’ launch. “It’s the eleventh hour; it can’t get any later than this,” Balchunas remarked on the turnaround, calling it a dramatic shift.
Read More: Cryptocurrency Surge: Bitcoin Breaks $50,000 Barrier Amidst Regulatory Approvals
For those blissfully ignorant of crypto Twitter drama, here’s a summary: In January, the SEC approved the first “spot” bitcoin ETFs, which are backed by actual bitcoin rather than futures. This milestone came a decade after the Winklevoss twins first filed for a spot bitcoin ETF in 2013.
Now, firms with spot bitcoin ETFs, such as ARK, Grayscale, Fidelity, and BlackRock, are eager to introduce spot ethereum funds. The rationale is clear—these spot crypto ETFs are highly profitable. Bitcoin ETFs garnered nearly $2 billion in just three days and now hold over $55 billion in assets.
Until this week, the prevailing belief among analysts and issuers was that the ethereum funds would likely be rejected by the May 23 deadline. The SEC had not been engaging with issuers in the same way it had before approving bitcoin ETFs, creating a pessimistic outlook for hopeful crypto investors.
Balchunas attributed the last-minute reversal to political factors. “This has become an election issue,” he said. With Donald Trump expressing support for cryptocurrency, “the Democrats don’t want to appear anti-crypto,” Balchunas added.
If approved, it would be a significant milestone for ethereum. “For bands, ETFs are like getting your music on Spotify and iTunes—they are the digital format of the investing world,” Balchunas explained. “This would be huge for ether.”
The final decision remains uncertain. As Thursday’s deadline approaches, everyone’s attention—and money—will be on the SEC’s ruling.