By
Godfrey Benjamin
June 28th, 2024
The effect of spot ETH ETFs on the price of Ether would be relatively smaller as compared to the approval of spot Bitcoin ETFs on BTC.
Spot Ethereum exchange-traded funds (ETFs) could be approved by July 4, as per a recent publication by Reuters. The United States Securities and Exchange Commission (SEC) recently approved the 19b-4 applications, but the S-1 filings have yet to be greenlit by the regulator.
As per the report, which cited anonymous sources, the SEC “could approve exchange traded funds tied to the spot price of ether as soon as July 4, as talks between asset managers and regulators enter the final stages, industry executives and other participants told Reuters”.
According to Reuters, industry participants and executives believe that the approval is imminent. A lawyer working with one of the ETF issuers stated that the process is “down to the finishing touches” and the approval is “probably not more than a week or two away”.
Executives belonging to two firms added that the issuers and the SEC are working out only the “minor issues” related to a few documents that need to be approved before the ETFs can be listed and traded in the United States. Once the SEC staff approves the changes in the documents, the trading of these products can start within 24 hours.
Notably, SEC Chair Gary Gensler recently talked about the approval of spot Ethereum ETFs, stating that the process is going “smoothly,” adding that “it’s really about the asset managers making the full disclosure so that those registration statements can go effective”. Gensler believes that the swiftness of the approval depends on the issuers and how fast they act in implementing the changes proposed by the regulator.
Last week, Bloomberg analyst Eric Balchunas said that the approval of spot ETH ETFs would happen by July 2nd, highlighting that the comments from the SEC have been light and nothing major.
It is important to note that the SEC also recently closed its investigation into Ethereum 2.0. As the digital asset community rejoiced, software development firm Consensys said that the fight with the regulator for clarity in the space is far from over.
Effect of Spot ETH ETFs on Ether
The effect of spot ETH ETFs on the price of Ether would be relatively smaller as compared to the approval of spot Bitcoin ETFs on BTC. Analysts have cited the smaller market share of ETH being the reason for this prediction.
Andrew Kang, a founder and partner at Mechanism Capital, recently said in a post on X that ETH will attract less institutional interest than Bitcoin since the network’s cash flows are not impressive. As a result, the price of Ether (ETH) might crash 30% following the approval of the ETF, said Kang, while adding:
“From the cycle bottom, BTC has returned 4.0x and ETH has returned a similar 4.0x. So how much upside would an ETH ETF Provide? I would argue not much unless Ethereum develops a compelling pathway to improve its economics.”
The price of ETH at the time of writing is $3,370.65, with a market cap of $404 billion. The digital asset’s value went down close to 6% in the past seven days and almost 14% in the last 30 days. However, Ether is up 80% since July 2023. Additionally, in the past 24 hours, the trading volume of the cryptocurrency dropped 5.40% to $11.4 billion. DefiLama data shows that Ethereum holds over $58.78 in total value locked (TVL).