When to Expect Ethereum ETFs?
After the much-anticipated approval of Bitcoin ETFs, several key players in the cryptocurrency market, including the investment powerhouse BlackRock, have submitted Ethereum ETF applications with the SEC. Let's evaluate the likelihood of these funds getting the green light.
Bitcoin's milestone as the first cryptocurrency approved for an ETF has paved the way for similar advancements in other digital currencies, especially Ethereum. Media outlets are optimistic about a positive outcome in 2024, though there are intricate details and potential hurdles to consider.
When Might Ethereum ETFs Get the Green Light?
Cryptocurrency funds quickly followed up the Bitcoin ETF applications with those for Ethereum. However, the US regulator's lengthy deliberation process has put Ethereum ETFs on the back burner.
In January 2024, the SEC extended its deadline for Ethereum ETF decisions. Upcoming reviews include applications from Fidelity on March 5 and BlackRock on March 10. Should further delays occur, the next key date is May 23, with the ultimate review scheduled for August 2024. According to SEC rules, the process can't be pushed beyond August 7, indicating a possibility of an earlier approval.
Apart from Fidelity and BlackRock, other cryptocurrency funds like VanEck, ARK 21Shares, Hashdex, Grayscale, and Invesco have also filed applications, with the next review set for February 6, 2024.
Public Sentiment on Ethereum ETF Approval
Betting platform Polymarket shows a 50% chance of Ethereum ETF approval by May 31, 2024. The current open interest for this future is an impressive $330,000, suggesting a positive user outlook on the SEC's decision.
Probability of Ethereum ETF Approval by May 31, 2024. Source: Polymarket.com
For instance: At the beginning of January, users had the opportunity to place bets on whether a Bitcoin ETF would be approved by January 15. The likelihood of this event was estimated at 80% at that time. Therefore, as we observe, traders on Polymarket were quite precise in predicting the outcome of the event. The ratio itself is determined by demand and supply, thus reflecting the actual interest and expectations of people.
Bloomberg Intelligence analyst James Seyffart commented in one of his tweets that postponements of deadlines by the SEC are quite expected, but the probability of Ethereum ETF approval in May 2024 is fairly high:
Tweet by James Seyffart about Ethereum ETF. Source: twitter.com
SEC Commissioner Hester Peirce, also known as "Crypto Mom" for her advocacy of cryptocurrency technologies, shared a similar sentiment in an interview with Coinage. She remarked that such decisions do not require additional legal processes, as all the issues had been addressed in previous SEC court cases related to cryptocurrencies.
According to all the data, the likelihood of Ethereum ETF approval from May to August 2024 is 90%.
The Impact of ETFs on Ethereum's Price
From mid-October 2023 to the end of January 2024, the Ethereum cryptocurrency rose by 75%. This rise was largely linked to the overall positive trend in the cryptocurrency market.
However, Ethereum's growth prospects are currently much higher than Bitcoin's. For instance, BTC's price is at $43,400 (as of writing this article), meaning it needs to increase by 60% to reach its all-time high.
Ethereum, on the other hand, is being more reserved. To achieve its previous all-time high, ETH needs to increase to $4868, or by 118%, making Ethereum's growth potential nearly double that of Bitcoin.
Another positive factor is Ethereum's deflationary nature. As per Ultra Sound Money data, Ethereum's issuance continues to decrease at a rate of 0.2% per year. Though this rate seems small, it's noteworthy that before the introduction of the burn algorithm, ETH's annual inflation rate was over 5%.
The approval of Ethereum ETFs seems almost certain in 2024. This could lead to another surge in Ethereum's growth, making investment in the asset appear promising. However, investors should remain mindful of the risks and not exceed their investment limits in cryptocurrencies.