Monkey Terminal Founder Hatu Sheik: Spot Ethereum ETF Is Big Time For Crypto But It’s Just The Beginning
After the approval of Spot Bitcoin Exchange Traded Funds (ETFs) in January this year, the crypto sector has scored another victory with the approval of Spot Ethereum ETFs.
On May 23, the US Securities and Exchange Commission (SEC) approved a total of eight spot Ethereum ETFs on NYSE Arca, Nasdaq, and BlackRock, Fidelity, Franklin, Grayscale, VanEck, Ark Invest 21Shares, Bitwise, and Invesco Galaxy. . Cboe BZX exchanges.
Until this week, the crypto market was waiting for a rejection only to see a sudden reversal from the SEC. As speculation mounts over whether the agency actually plans to approve the Ether ETF, the SEC has asked issuers to quickly update their applications.
Because the SEC acted in a hasty and uncoordinated manner, it was assumed that the decision was politically motivated.
We view this ETF approval and crypto broadly as a political issue ahead of the 2024 US presidential election.
JPMorgan wrote analysts in a report on Friday.
This week, the US House of Representatives passed the FIT 21 Act, which gives the CFTC jurisdiction over crypto, although it has yet to pass the Senate.
It's hard to believe that the SEC will do us any favors like approving the Spot ETH ETF.
But policy is politics, and crypto has been winning the political battle for months.
Perhaps the Biden camp saw how many voters Trump could win with one pro-crypto comment and decided to tip.
— Jake Chervinsky (@jchervinsky) May 21, 2024
As a result, the price of ETH rose from $3,069 to $3,800 on Monday, and rose to $3,900 on Thursday, the day of approval, but fell slightly to $3,669. As of writing, ETH/USD is at $3,741, and ETH/BTC is at 0.0543.
This lack of momentum can be attributed to the fact that the crypto sector has already been long on ETH for years and is a typical case of ‘buy the rumour, sell the news'. BTC price even dropped 19% in the two weeks following the ETF approval before hitting a new all-time high (ATH).
This indicates that the price of ETH is even lower, and we can return to $ 3K, both retail and institutional investors can buy ETH and build their portfolios.
The SEC has only approved 19b-4s and has yet to approve S-1s, which would clear direct ETFs for startups and businesses.
The S-1 is a comprehensive document that describes the issuer's financials as well as their risk profile and the securities they intend to offer.
It can take between weeks and months to get S-1 approvals, according to analysts. JPMorgan analysts expect spot Ethereum ETFs to begin trading “well before November.”
As for why Alpha won't issue ETH:->Only 19b-4s are approved, not S-1s–>Approved by the ‘delegated authority' of the business/market division–>Means that the commissioner can compete within the next 10 days (aka. to hide the vote). trying b/c it's political)
What is really happening…
— _gabrielShapir0 (@lex_node) May 23, 2024
This approval came after the issuers deleted any material references from their 19b-4 forms.
Staking is one of the most attractive aspects of proof-of-stake (PoS) networks like Ethereum, which provide additional rewards to token holders. This is why there is a total of 32.54 million ETH so far, which represents a 27.15% share of the ETH supply.
In Q1 2024, there was a 9% increase in stock ETH driven by liquid staking, re-holding and liquid stacking, as reported by Glassnode.
The ETH ETF really came into the summer when there was no clear narrative to help the price.
Thus, the approval helped the broader crypto industry go green, with the total crypto market cap reaching $2.7 trillion. With that, market sentiment has been glowing ‘extremely greedy' since Tuesday, according to the Crypto Fear and Greed Index reading 76 on a scale of 1-100.
While ETH and altcoins like PEPE are enjoying highs, Bitcoin is under pressure, with its price falling from $71,465 on Tuesday to $66,940 on Friday. Now, BTC/USD is back above $69,000, up 156% since Q3 2023.
The weakness in BTC prices may be a reflection of anxious market sentiments regarding future Bitcoin ETF flows, now that another product has entered the market. However, not everyone believes so; Some expect BTC to lead and ETH to receive only a fraction of the flows.
One of the challenges for the Ether ETF to break into the 60/40 boomer world is to distill its purpose/value into an easily understood sound bite “bitcoin is digital gold.” Is there such a simple one-liner for Ether? If so, what is it?
— Eric Balchunas (@EricBalchunas) May 24, 2024
When it comes to how much institutional capital the ETH ETF can attract, Standard Chartered Bank has predicted revenues of up to $45 billion within a year of going live.
By comparison, Bitcoin ETFs have seen $57 billion in assets under management (AUM) in less than five months.
The Bitcoin ETF race is being led by BlackRock and Fidelity, both of which accumulated more assets in the first 50 days than any other ETF in history, according to Bloomberg Senior ETF Analyst Eric Balchunas.
“This is a great achievement not only for ETH, but for the entire crypto industry, which marks another victory,” said Hatu Sheikh, founder of Ape Terminal. “
“I expect a huge influx of money into the ETH ETF, but I don't see it taking the limelight from BTC as they both have their own unique functions. In fact, this is just the beginning, and we could very well see Solana and the original meme coin, Doge, get their own ETFs.”
Sheikh added.
“Ultimately, the sector would do well to boost innovation and adoption by increasing access, regulatory transparency and attracting institutional investors.”
As ETFs see an influx of retail and institutional capital, BTC and ETH prices, along with the rest of the market, are expected to rally strongly in the coming months.
