Is Ethereum ETF Approved? Will Ethereum price increase if ETH ETF’s trading start ?

By Raghav
Sawhney

Starting
off
with
positivity,
it
looks
like
ETH
ETFs
may
start
trading
by
July
4th
(Which
is
now
delayed
by
the
SEC).

We’re
on
the
edge
of
a
significant
breakthrough:
the
approval
of
the
first
spot
Ethereum
ETFs
by
the
U.S.
SEC.

As
speculation
mounts,
here’s
a
deep
dive
into
the
implications
of
this
approval,
exploring
the
background,
recent
developments,
market
implications,
expert
analysis,
and
more.
This
comprehensive
overview
may
help
in
understanding
where
ETH
ETFs
currently
stand.

What
is
Ethereum
and
what
happened
with
Bitcoin
ETF
Approvals?

Ethereum
is
the
second-largest
cryptocurrency
by
market
capitalisation,
and
has
been
a
cornerstone
of
the
blockchain
ecosystem
since
its
launch
in
2015. 

Unlike
Bitcoin,
which
primarily
serves
as
a
digital
currency,
Ethereum
supports
smart
contracts
and
decentralised
applications
(dApps),
making
it
a
versatile
platform
for
innovation.

The
journey
of
Bitcoin
ETFs
began
with
multiple
rejections
by
the
SEC,
primarily
due
to
concerns
over
market
manipulation
and
insufficient
regulatory
oversight.
However,
in
October
2021,
ProShares’
Bitcoin
Strategy
ETF
became
the
first
Bitcoin
futures
ETF
to
gain
approval,
paving
the
way
for
further
crypto
investment
products.

The
first
spot
Bitcoin
ETF
was
approved
in
January
2024
after
a
decade
of
regulatory
hurdles
which
paved
the
way
for
the
potential
acceptance
of

Ethereum
ETFs.

Recent
Developments

One
of
the
most
compelling
narratives
of
the
Ethereum
ETF
is
its
impact
on
investors.
The
ETF
structure
provides
several
advantages,
including
ease
of
access,
as
investors
can
purchase
Ethereum
ETFs
through
traditional
brokerage
accounts.
Additionally,
ETFs
offer
enhanced
protection,
because 
regulatory
oversight
by
the
SEC
ensures
higher
standards
of
security,
keeping
investor
scepticism
at
bay. 

Eight
major
asset
managers,
including
BlackRock,
VanEck,
Franklin
Templeton,
and
Grayscale
Investments,
have
filed
for
spot
Ether
ETFs.
The
SEC
has
already
approved
the
listing
of
these
ETFs
on
major
exchanges
like
Nasdaq,
CBOE,
and
NYSE.
The
final
approval
of
S-1
forms,
which
detail
the
fund’s
structure,
management,
and
investment
strategy,
is
all
that
remains.





On
May
23rd,
the
SEC
approved
19b-4
applications
from
these
firms,
allowing
them
to
issue
spot
Ether
ETFs. 

“After
careful
review,
the
Commission
finds
that
the
Proposals
are
consistent
with
the
Exchange
Act
and
rules
and
regulations
thereunder
applicable
to
a
national
securities
exchange.”
SEC
Chair
Gensler.

Now
2
months
later
we
are
at
the
stage
where
S-1
filings
may
be
approved
by
July
4th
with
Grayscale
holding
about
3
million
ETH.

The
Process
Unveiled

1. 
   19b-4s
   (Exchange
   Rule
   Changes)
   
   Imagine
   exchanges
   like
   the
   NYSE
   or
   Nasdaq
   wanting
   to
   list
   a
   brand-new
   product:
   Ethereum
   ETFs.
   To
   do
   this,
   they
   must
   file
   a
   19b-4
   form
   with
   the
   SEC.
   This
   filing
   asks
   for
   permission
   to
   change
   rules
   or
   introduce
   new
   products,
   essentially
   allowing
   the
   exchange
   to
   list
   these
   Ethereum-based
   ETFs.
2. 
   S-1s
   (Registration
   Statements)
   
   The
   S-1
   is
   a
   deep
   dive
   into
   the
   ETF’s
   blueprint.
   It
   outlines
   everything
   from
   the
   fund’s
   management
   to
   how
   it
   plans
   to
   mirror
   Ethereum’s
   performance.
   This
   registration
   is
   critical
   as
   it
   provides
   potential
   investors
   with
   all
   the
   necessary
   information
   about
   the
   ETF.
3. 
   The
   SEC’s
   Decision-Making
   Process
   
   Both
   the
   19b-4s
   and
   S-1s
   must
   be
   approved
   by
   the
   SEC
   for
   the
   ETFs
   to
   be
   legally
   sold.
   The
   SEC
   usually
   has
   45
   days
   to
   make
   a
   decision
   on
   the
   19b-4
   filings,
   extendable
   to
   240
   days.
   Approval
   of
   these
   filings
   means
   the
   ETFs
   can
   be
   listed,
   but
   without
   S-1
   approval,
   they
   can’t
   be
   sold
   to
   investors.
4. 
   Potential
   for
   Delay
   
   Even
   with
   19b-4
   approval,
   the
   SEC
   can
   “slow
   play”
   the
   S-1
   approval.
   This
   means
   they
   could
   take
   longer
   to
   review
   and
   approve
   the
   registration
   statements,
   allowing
   them
   more
   time
   to
   evaluate
   market
   conditions
   and
   the
   specific
   structures
   of
   these
   ETFs
   without
   outright
   denying
   the
   applications.

So
what
now?

The
approval
of
Ethereum
ETFs
is
expected
to
have
significant
market
implications:

Price
Movements:

Previous
data
shows
that
the
approval
of
Bitcoin
ETFs
led
to
a
substantial
increase
in
Bitcoin’s
price.
Similarly,
Ethereum
is
expected
to
experience
heightened
price
volatility.
For
instance,
Ethereum
rose
2%
on
the
news
and
was
trading
at
$3,900
as
of
press
time.

Future
Outlook:
Bullish
patterns,
the
potential
approval
of
spot
Ethereum
ETFs,
and
historically
favourable
conditions
during
“Uptober”
could
drive
Ethereum
to
new
all-time
highs
by
the
end
of
2024.

Market
Predictions:

Analysts
are
buzzing
with
excitement,
predicting
a
potential
30%
surge
in
Ethereum’s
value
within
the
first
month
of
ETF
trading.
If
Ethereum
can
smash
through
the
psychological
barrier
of
$4,000
and
conquer
the
R2
Fibonacci
pivot
at
$4,230,
the
sky’s
the
limit.
With
market
sentiment
on
the
upswing,
we
could
see
a
swift
rebound
above
$3,500,
paving
the
way
for
Ethereum
to
reach
new,
unprecedented
highs.

On
20
May
2024,
Bloomberg
ETF
analysts


Eric
Balchunas
and
James
Seyffart

significantly
increased
their
estimated
odds
of
SEC
approval
for
spot
ETH
ETFs
from
25%
to
75%.
This
change
was
brought 
on
by
emerging
rumours
suggesting
that
the
SEC
might
be
reconsidering
its
stance,
driven
by
political
considerations.

On
the
other
hand
a
well-known
crypto
analyst,


Pentoshi
remains
skeptical

on
the
projected
highs
for
the
ETH
after
the
ETFs
roll
out.





Technical
Analysis:
Ethereum
has
broken
out
of
a
falling
wedge
pattern,
with
significant
resistance
expected
between
$4,000
and
$4,230
and
strong
support
near
$3,000,
aligned
with
the
200-day
EMA.

Data
and
Dashboards


Market
data
from


CoinMarketCap

and
Glassnode
indicate
a
surge
in
trading
volumes
and
active
addresses,
suggesting
growing
investor
interest
and
market
participation.

(Data
as
taken
on
28th
June
)

Price
movements
of
Ethereum
show
significant
spikes
around
major
news
events.

Charts
also
show
a
substantial
influx
of
institutional
investments
into
Ethereum-related
products,
with
a
notable
increase
in
Grayscale’s
Ethereum
Trust
holdings.

Projects,
Protocols
and
the
People

Ethereum’s
ecosystem
hosts
numerous
key
projects
and
protocols,
including
Uniswap,
Aave,
and
Chainlink.
These
projects
are
poised
to
benefit
from
the
increased
attention
and
investment
resulting
from
Ethereum
ETF
approvals.





For
instance,
Uniswap’s
daily
trading
volume
saw
a
15%
increase
following
the
news.

Users: 

–
Active
Wallets:
The
number
of
active
Ethereum
wallets
has
surged
to
over
70
million,
with
daily
transaction
volumes
exceeding
1.2
million.

–
Transaction
Volume:
Ethereum’s
transaction
volume
has
consistently
grown,
reaching
new
highs
of
$15
billion
daily,
driven
by
DeFi
and
NFT
activities.





The
crypto
community
is
geared
up
for
the
Pros
and
Cons
that
come
with
ETF
approvals. 
Community
members
on
Crypto-twitter
have
been
largely
positive,
reflecting
excitement
and
bullish
sentiment
on
this
topic.

A
Brief?

Approval
of
Ethereum
ETFs
could
lead
to
increased
mainstream
adoption
of
Ethereum,
providing
a
regulated
and
safer
investment
environment.
Just
like
there
are
pros
and
Cons
for
everything,
the
SEC’s
approval
of
Ethereum
ETFs
may
represent
a
watershed
moment
for
the
cryptocurrency
market. 

With
increased
institutional
participation,
ETH
ETFs
will
improve
market
liquidity
and
provide
the
means
for
a
robust
regulatory
framework.
Ethereum
is
set
to
achieve
new
milestones.
Conversely,
delays
or
denials
could
reflect
the
SEC’s
ongoing
concerns
about
the
stability
and
security
of
cryptocurrency
investments.