Crypto Insiders Anxious as Ether ETF Decision Looms

As the U.S. Securities and Exchange Commission (SEC) nears its decision on spot Ether exchange-traded funds (ETFs), expectations are running high. Lucas Kiely, the chief investment officer at Yield App, told that Ether’s recent unexpected 20% price surge caught many off guard. He advised investors to be cautious and thorough, emphasizing that the SEC’s decision on the ETH spot ETFs is still up in the air: “The SEC hasn’t even made its decision on the ETH spot ETFs yet, it could still go either way,” he wrote. Kiely also suggested that even if approved, a short-term pullback could occur, much like what happened with spot Bitcoin ETFs.

Jeff Owens, co-founder of the layer-1 blockchain Haven1, concurs with Kiely’s assessment. Owens remarked that Ether’s surprising price hike highlights the high stakes tied to the SEC’s potential approval of a spot ETH ETF. He pointed out that approval would likely trigger a sector-wide rally among altcoins, particularly those based on the Ethereum Virtual Machine. Owens highlighted the impact already visible on Ether and many altcoins, especially layer-2 solutions like Arbitrum and Optimism, as well as decentralized finance platforms like Uniswap and Aave.

Optimistic forecasts abound, with individuals like Geoffrey Kendrick, head of FX research at Standard Chartered Bank, providing particularly bullish projections. Kendrick speculated that the approval of spot Ether ETFs could result in financial inflows ranging between $15 billion to $45 billion. He believes the ETH ETF flows could be even more influential on Ether’s price compared to Bitcoin ETFs, given the absence of similar investment vehicles like MicroStrategy for Ether. Kendrick argued that once investors recognize Ether as the “big tech” of digital assets, they are likely to embrace it enthusiastically.

Several U.S. Ether ETFs are currently in the pipeline, with significant deadlines approaching. The final decision on the VanEck ETF filing is expected by May 23, closely followed by the ARK Invest and 21Shares deadlines on May 24. A few days earlier, Eric Balchunas, a senior ETF analyst at Bloomberg, dramatically increased the probability of approval from 25% to 75%. He cited political pressure as a key factor influencing this updated estimate. Betting markets currently place the odds of an ETF approval at 61%.

As this critical decision looms, major cryptocurrencies have exhibited increased volatility. Owens cautioned that if the SEC were to reject the ETF applications, a significant price correction could follow. Conversely, even if the ETFs are approved, he warned of a potential “sell the news” event in the short term.

Despite the uncertainty, many in the market are optimistic about the transformative potential of spot Ether ETFs. The approval could attract substantial institutional investments, elevating Ether’s profile and potentially leading to a broader acceptance among mainstream investors. It could validate Ether’s role as a major player in the digital asset space.

On the flip side, the SEC’s decision will also set a precedent for future cryptocurrency ETFs. Approval would pave the way for additional crypto-based ETFs, further integrating digital assets into traditional financial markets. Rejection could put a damper on investor sentiment and stall the momentum that cryptocurrencies have recently gained.

In this crucial period, investors and market watchers are keenly observing every development. The impending SEC decision is not just about one asset; it has broader implications for the entire cryptocurrency ecosystem, influencing how digital assets could be perceived and regulated in the future.