Ethereum (ETH) price increases in anticipation of new ETF approval
Bloomberg ETF analysts Eric Balchunas and James Seifert have increased the likelihood of approval of an Ethereum exchange-traded fund (ETF) in the United States from 25 percent to 75 percent.
This news sent shock waves through the cryptocurrency market, with the price of Ethereum surging 8-11 percent to around $3,400.
TLDR
Bloomberg ETF analysts Eric Balchunas and James Seifert have increased the probability of Ethereum ETF adoption in the US from 25 percent to 75 percent. Analysts cite political factors and noise from the SEC as possible reasons for their updated forecasts. The first ETF approval deadline is May 23 for VanEck's Ethereum ETF, followed by the deadlines for the ARK21 Shares and Hashdex Nasdaq Ethereum ETFs. News of the increased approval odds led to an 8-11% increase in Ethereum price, reaching $3,400, and a significant increase in liquid short positions. The approval of Spot Ethereum ETFs may signal a shift in US crypto policy and may be influenced by the upcoming presidential election.
Analysts cited possible political factors and noise from the Securities and Exchange Commission (SEC) as the main reasons behind the updated forecast.
Balchunas said the SEC could do a “180” on the ETF approval issue, which has become increasingly political. The industry consensus prior to this announcement was that ETFs could be rejected due to a lack of communication between ETF issuers and the SEC.
Update: @JSeyff and I are raising the SpaceEther ETF approval to 75% (vs. 25%), hearing that the SEC might do a 180 on this (politically) this afternoon and now everyone is reeling (assuming no one else is banned like us). look out…
— Eric Balchunas (@EricBalchunas) May 20, 2024
The first ETF approval deadline is fast approaching, with VanEck's Ethereum ETF filing set for May 23. That will be followed by the ARK21 Shares Ethereum ETF on May 24 and the Hashdex Nasdaq Ethereum ETF on May 30.
The approval of these EFAs could mark a major shift in US crypto policy, especially in light of the recent bipartisan SAB 121 vote.
Things are taking a turn for the better this week with spot #ehereum ETF approvals. Raising our odds to 75%.
— James Seyff (@JSeyff) May 20, 2024
The sudden increase in leverage has had a huge impact on the cryptocurrency market. In addition to Ethereum's price increase, nearly $150 million in short positions were liquidated in crypto exits over the past 24 hours, with $35.3 million in short positions in ETH.
The SEC's stance on cryptocurrencies is the subject of much debate, so the approval of spot Ethereum ETFs will be a shocking development to many in the industry.
Some speculate that the possible change in the position of the SEC may have an impact on the upcoming presidential election.
President Joe Biden's administration may be looking to present himself as a candidate friendly to the crypto industry, especially given former President Donald Trump's recent statements.
The adoption of spot Ethereum ETFs could open the doors to further institutional investment and adoption of major cryptocurrencies.
