Bloomberg’s ETF analysts have decreased the likelihood of a spot Ethereum ETF approval in May to 30%. Earlier, in January, they had estimated a 70% chance of approval by May. Similarly, another analyst had given a range of 60-65% likelihood.
The SEC will make a crucial decision on the approval of the spot Ethereum ETF in May. Yet, due to the ongoing uncertainty, the market is increasingly pessimistic about the approval chances. It’s worth noting that the SEC historically took more than ten years to approve Bitcoin ETFs.
Ethereum ETF Approval Uncertainty Grows
According to Seyffart, a notable figure in the crypto space, the likelihood of Ethereum ETF approval feels increasingly bleak. As the days pass without significant developments, optimism dwindles, reminiscent of the opposite trajectory observed during the Bitcoin ETF approval process. With only about 73 days left until the deadline, the lack of progress is becoming more apparent, leading to dwindling confidence in the approval prospects.
This #Ethereum ETF cycle feels like the opposite of #Bitcoin ETF approval odds at the moment. The more we see/hear (and don't see/hear) the less optimistic I become.
We're ~73 days from the deadline and there really seems to be little to no movement https://t.co/N6OpM870XF
— James Seyffart (@JSeyff) March 11, 2024
On March 8, Coinbase and Grayscale engaged in discussions with the SEC regarding the potential conversion of Grayscale’s Ethereum Trust into an ETF. Typically, such meetings would signal positive progress. However, as Balchunas noted, there has been no indication from the SEC regarding their stance on the matter. This lack of feedback adds to the prevailing uncertainty surrounding the Ethereum ETF approval process.
Uncertainty Surrounds Ethereum ETF Approval
Over the past few months, optimism regarding the imminent approval of an Ethereum ETF has waned among those who were once most confident. The primary reason for this shift is the absence of significant changes in filing for such products, which preceded the approval of Bitcoin ETFs.
In January, GSR, a crypto market-making firm, estimated the approval chances at 70%. While they still lean towards approval, research analyst Brian Rudick suggests that their estimates might soon change. The absence of movement akin to the activities observed before the approval of Bitcoin ETFs in October, such as issuers seeding the ETFs and the DTCC listing them, raises concerns. If positive progress isn’t seen within the next month, GSR plans to lower their approval odds.
Despite these challenges, GSR maintains that Ethereum ETF applications will likely unfold similarly to Bitcoin due to the requirement for comparable treatment of spot and futures-based applications.
Skepticism Surrounds Ethereum ETF Approval
Jake Chervinsky, the Chief Legal Officer at Variant Fund, shares concerns about the lack of progress and maintains a skeptical view regarding the approval of a spot Ethereum ETF. Despite acknowledging a possibility of approval, he believes that the current market sentiment overestimates the chances, considering various political and strategic factors. Chervinsky anticipates more clarity on the SEC’s stance in the coming weeks, emphasizing the importance of signals from the regulatory body.
Chervinsky draws a parallel with the approval process for spot Bitcoin ETFs, where the SEC’s detailed work before the deadline hinted at the eventual approval. He suggests that a similar pattern of activity is yet to emerge as the May 23 deadline for Ethereum ETFs approaches, indicating potential challenges ahead.
In line with Chervinsky’s cautious outlook, investment banks such as JPMorgan and TD Cowen also estimate that spot Ethereum ETFs are unlikely to receive approval by May.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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