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Ethereum (ETH), the second-largest cryptocurrency by market cap, has surged by 17% following the news of a higher success rate for its exchange-traded fund (ETF) to be approved by the U.S. Securities and Exchange Commission (SEC).
On May 20, Ethereum experienced a significant price increase, currently trading at $3,658 with a 24-hour trading volume of $37 billion. This rise came after Eric Balchunas, a senior analyst at Bloomberg, raised the odds of Ethereum ETF approval from 25% to 75%.
Balchunas pointed out that the SEC’s accelerated pace in approving the ETF might be due to political pressure, as the agency’s previous stance showed limited engagement with ETF applicants.
@JSeyff and I are increasing our odds of spot Ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue), so now everyone scrambling (like us everyone else assumed they’d be denied).
Additionally, Balchunas mentioned that the SEC is urging exchanges such as the NYSE and Nasdaq to revise their filings, although there has been no formal 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. According to Geraci, the SEC could accept the exchange rule amendments (19b-4s) independently from the fund’s registration (S-1), which might be delayed beyond VanEck’s Ethereum spot ETF request deadline of May 23.
The potential delay would provide the regulator more time to evaluate and approve these documents, considering the complexities and risks associated with systems that use Proof-of-Stake (PoS) cryptocurrency.
The SEC has already been investigating whether ether, the Ethereum blockchain’s primary native asset, is a security. This formal investigation began after the network transitioned from a Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) mechanism. If the SEC determines that ether is a security, the regulatory body may reject the spot ether ETF applications.
Analysts at QCP Capital believe that the market’s “resounding lack of interest,” combined with the approval of a spot Ethereum ETF, could provoke a short squeeze, potentially pushing ETH back to its recent highs of March 12, when it was trading at $4,066, according to data from CoinMarketCap.
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