Bloomberg analyst Eric Balchunas has stated that the SEC’s approval of a Spot Ethereum ETF remains a possibility. This statement comes amidst renewed rumours that the SEC is reconsidering the approval of a Spot Ethereum ETF, despite the regulator’s recent negative stance on cryptocurrencies, especially Ethereum, which has been viewed as an illegal security asset.
This new development has driven Ethereum’s price up by 20% in a single day, giving investors confidence that the impact of an ETF approval could be similar to that of Bitcoin.
Analyst States Spot Ethereum ETF Approval Still Possible
In a tweet published over the weekend, Nate Geraci, founder of the ETF Institute, which provides certification for ETF advisors, mentioned that approving a Spot Ethereum ETF is still possible.
He reminded the crypto market that this week, the SEC or Securities and Exchange Commission has a deadline to approve or reject the first Spot Ethereum ETF in America.
Previously, this discussion has been significant because the SEC is known as an anti-crypto institution. However, following the approval of the Spot Bitcoin ETF, many assumed it would be easier for financial managers and other ETF issuers to seek permission for crypto-based ETFs.
But, a few weeks after the Spot Bitcoin ETF approval, the SEC started making statements indicating that all cryptocurrencies except Bitcoin are illegally traded securities, including Ethereum.
Although this statement has been circulating since 2020, the view on Ethereum has become more serious due to a legal case between the SEC and Consensys and in this case, the SEC considered Ethereum to be a security, thus reducing the likelihood of a Spot Ethereum ETF being approved.
However, unexpectedly, information surfaced from Nate Geraci, followed by Eric Balchunas, an ETF analyst from Bloomberg, suggesting that a Spot Ethereum ETF could still be approved. This statement was based on circulating information, although lacking strong sources, about a recent internal SEC meeting discussing whether Ethereum is considered a security or not.
Rumours suggest that Ethereum is viewed as a commodity, leading many to believe that the Spot Ethereum ETF could be approved.
The market has reacted positively to this possibility, with many investors expressing their views on Polymarket, a platform typically used to monetise the likelihood of a news event. Many believe that the Spot Ethereum ETF will be approved by 31 May 2024, with 61% of Polymarket users voting in favour.
Eric Balchunas also increased his view on the likelihood of Spot Ethereum ETF approval, raising it from an initial 25% to now 75%.
Ethereum’s Upward Movement
In response to this news, Ethereum has shown a positive movement, appreciating by 20% and returning above the $3,500 region in just one day.
This price appreciation continues its recent upward trend, breaking out of the correction zone that has been strong since the end of March. Other cryptocurrencies were also impacted, including Bitcoin, which moved upwards, along with the majority of layer-two blockchain coins within the Ethereum ecosystem.
Overall, the EVM ecosystem has also shown an upward trend, creating a positive environment for most tokens in the crypto market. Despite this positivity, there remains a possibility of correction due to the weak sentiment sustaining this positive outlook.
The RSI indicator suggests that this appreciation might push Ethereum into the overbought zone, indicating a potential correction. This correction could also provide an opportunity for price appreciation normalisation, likely supported by short-term profit-taking traders.
Therefore, traders and investors should maintain risk management to avoid being driven by FOMO and to navigate market volatility effectively.
