After Bitcoin Euphoria: All Eyes on Ethereum ETFs, Will They Be Approved?

The recent flurry of activity around Bitcoin spot ETF approvals has the crypto world buzzing about what could be next. All signs point to Ethereum being the next major digital asset in focus for exchange-traded fund providers seeking regulatory approval.

Keypoints

• Ethereum (ETH) has significantly outperformed Bitcoin in recent days, indicating traders are anticipating potential approval of spot ETFs for ETH.
• Approval of spot Bitcoin ETFs has increased odds for ETH spot ETF approval, as SEC used similar logic regarding fraud/manipulation impacting both spot and futures prices.
• Traders are accumulating other Ethereum-related assets like layer-2 tokens in anticipation of spot ETH ETF approval being next big catalyst.
• BlackRock CEO Larry Fink sees value in an Ethereum ETF, giving confidence to the prospect. Multiple major firms have filed for ETH spot ETFs.
• However, some predict ETH spot ETF approval could face delays due to regulatory concerns around classifying Ether as a security rather than commodity.

Ethereum has handily outperformed Bitcoin in recent trading, surging over 10% versus Bitcoin since fake news of a BTC spot ETF approval earlier this month. According to data analytics firm IntoTheBlock, this suggests traders are operating under the assumption that Ethereum will be the next cryptocurrency to be granted a spot ETF.

The logic follows the Securities and Exchange Commission’s (SEC) own reasoning in finally approving Bitcoin spot ETF products. In its approval order, the SEC stated that potential manipulation impacting Bitcoin’s spot markets would likely have a similar effect on related futures markets. Given that Ethereum already has a futures-based ETF trading in the US, the door seems open for regulators to apply the same thinking to a spot ETF tied directly to Ether.

The market enthusiasm extends beyond just Ethereum itself. Other crypto assets related to Ethereum’s ecosystem have also seen traders piling in over the past week. This includes layer-2 tokens associated with Ethereum’s scaling solutions as well as tokens tied to liquid staking protocols. With the expectation that approval of spot ETFs tracking digital assets can provide a significant catalyst for prices, the broader community is positioning for an Ether spot ETF green light.

And that approval may have just gotten more likely following comments from BlackRock CEO Larry Fink. The head of the world’s largest asset manager told CNBC he sees value in an Ethereum ETF. BlackRock has already started the process of applying for such a product.

Major financial powers like Fidelity, Ark Invest, and VanEck have also thrown their hats in the ring with filings for spot Ether ETFs. In fact, VanEck has the earliest deadline for a decision from the SEC, coming up on May 23rd of this year. Some analysts give over a 70% probability of approval by that date.

However, there are also notes of caution from other market experts. Investment bank TD Cowen predicts delays may be ahead, with the SEC likely taking a very cautious approach even in light of the Bitcoin approvals. The key question centers around whether regulators will classify Ether similarly to Bitcoin as a commodity rather than a security. If the latter, it introduces more complexity around applying standards meant for exchange-traded products around traditional securities. Until the SEC gains further confidence from observing recently approved Bitcoin ETFs, an Ethereum product may remain sidelined despite industry pressure.

Yet with mounting options for institutional and retail investment gaining SEC approval, the path ahead seems increasingly positive. While delays may yet materialize, an Ethereum ETF seems destined to arrive sooner rather than later. Once open for trading by the masses, such a product would arguably be an even greater catalyst for growth and mainstream adoption than Bitcoin has enjoyed thus far.

As the crypto community shifts attention to the next likely milestone, the stakes couldn’t be higher for Ethereum to fully emerge from Bitcoin’s shadow and cement its status as the leading smart contract platform.