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Ethereum's rapid surge and the anticipation of SEC's ETF decision


Ethereum's rapid surge

Ethereum experienced a remarkable surge within just seven trading sessions between May 15 and 21, rising by nearly $970, which translates to almost a 34% increase. This significant boost was most notable on Monday, where it saw a single-day rise of over 19%. This one-day increase was the largest since January 3, 2021. The dramatic appreciation in Ethereum's value was mainly fueled by expectations that the U.S. Securities and Exchange Commission (SEC) might approve applications for spot Ethereum Exchange-Traded Funds (ETFs) before the end of the week.


According to Andrey Stoychev, head of the brokerage firm Nexo, such approval could spark a massive rally in Ethereum's price, potentially propelling it towards $10,000, up from its current level of just under $3,700.


The five-member board of the SEC faces a critical deadline, needing to decide on the ETFs by today or tomorrow at the latest. If they fail to make a decision within this timeframe, it is possible that the decision will be postponed until December. This impending decision is highly anticipated, as it could have significant implications for the cryptocurrency market.



The SEC commissioners have shown a range of opinions regarding cryptocurrencies, indicating a substantial divide. Hester Peirce, who is well-regarded in the crypto community and known as "crypto-mom," is a strong advocate for the approval of spot Ethereum ETFs. Mark Uyeda, another commissioner, shares a similar stance. He believes that the process for approving Bitcoin ETFs took excessively long, which suggests that he might be more willing to expedite the approval process for Ethereum funds.


On the other hand, Caroline Crenshaw stands in stark opposition. She has expressed considerable skepticism about spot ETFs, emphasizing concerns related to fraud and manipulation within the cryptocurrency industry. Her stance represents a significant hurdle for the approval of these funds.


The decision of Jaime Lizárraga remains a significant uncertainty. He previously opposed the approval of spot Bitcoin ETFs, but when he joined the SEC in 2022, he showed openness towards cryptocurrencies. His current position is unclear, making his vote a crucial factor in the upcoming decision.



Ultimately, the final decision seems to rest with Gary Gensler, who has been the SEC chair since 2021. Gensler's recent actions suggest that he approaches cryptocurrencies with a high degree of caution. Despite this cautious stance, he approved the first U.S. Bitcoin ETFs in mid-January, which provides a glimmer of hope for a similar decision regarding Ethereum. His actions in the coming days will be closely watched by the market.


The approval of spot ETFs could serve as a major catalyst for Ethereum's price. Should the SEC give the green light, it could drive Ethereum's price towards $10,000. Given the current price of just under $3,700 per Ethereum, this represents a potential increase of $6,300, which is over 170%. Such a significant rise would mark a monumental shift in the cryptocurrency's market position.


For these Ethereum ETFs to be traded, there is an additional requirement: the approval of S-1 filings. This process could take several weeks or even months. The timeline for these approvals is crucial for the market participants who are eagerly awaiting the introduction of these ETFs.



ETF issuers will also need to secure approval for their S-1 filings. According to James Seyffart, a Bloomberg ETF analyst, who commented on the matter in a post on X on May 20, it could take weeks or months to see these approvals and thus for ETH ETFs to become live. He added that if the theoretical approvals occur this week, it would mean that the S-1 approvals are a matter of "when" rather than "if." This perspective offers a more optimistic outlook for the eventual trading of these ETFs.


Yunus Ozkayi, the CEO and founder of the FreeBnk app, also weighed in on the situation. He believes that while the SEC is likely to accept VanEck's application, the approval of S-1 filings might be delayed until 2025.



He does not expect anything to be ready for trading before 2025. However, he notes that once these approvals are in place, it will have a substantial positive impact on the market, even if the S-1 approval process takes longer than anticipated. This long-term view highlights the potential for significant market changes in the coming years.


22.05.2024



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