Bloomberg Analyst Raises Spot Ethereum ETF Approval Odds to 75%: Will Approvals Happen This Week?

On Monday, May 20th, Bloomberg ETF analyst Eric Balchunas posted on X, raising his chances of a spot ETF approval from 25% to 75%. Within an hour, the post received over one million views. Balchunas is regarded as one of the most trusted sources in the crypto ETF space after playing a role in news coverage of the spot Bitcoin ETFs, which were released in January 2024. The update from Balchunas made waves in the crypto markets, causing the price of ETH to skyrocket over 10% within minutes.

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Balchunas said that he is "hearing chatter this afternoon that SEC could be doing a 180 on" spot Ethereum ETF applications. The SEC has been largely quiet about Ethereum ETFs over the past several months, mainly looking to make a decision on whether ETH should be classified as security or a commodity. Because the SEC has been so quiet, many have taken it as negative for the chances of a spot ETH ETF approval. However, with a final deadline for multiple ETFs on May 23rd and 24th, there is seemingly pressure on the SEC to make decisions before the deadline. 

To add more context to Balchunas' post, he alluded to another tweet from Nate Geraci, a crypto ETF expert. Geraci's tweet noted that the "SEC must approve both the 19b-4s (exchange rule changes) & S-1s (registration statements) for ETFs to launch. Technically possible for SEC to approve 19b-4s & then slow play S-1s (esp given reported lack of engagement here)."

Essentially, the SEC could give a partial greenlight to the ETFs, giving them time to take a much closer look at S-1s, which would allow them to better vet the applications to see how compliant they would be. This seems to make the most sense, as the SEC has been in the midst of a large debate surrounding the ETFs that could take more time than previously thought to conclude. 

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Another point of context is that ARK and 21Shares recently amended their application to remove staking. The move was likely made in an attempt to make their application more appealing to the SEC. While removing staking is obviously a negative for the ETF, it could play a role in increasing the odds of approval. 

The buzz that Balchnas is hearing must be significant. Less than a week ago, he posted saying that he believes the odds of a spot ETH ETF are "slim to none", but has since raised his prediction to 75%. 

The path of the Ethereum ETFs does share some similarities with the approval of the spot Bitcoin ETFs, as the SEC was largely quiet in the weeks and days leading up to the approval. While the situations are largely different, it does show that it is entirely possible that the SEC could approve spot ETH ETFs later this week despite relative silence from the SEC. 

A spot Ethereum ETF would be a huge milestone for crypto adoption, allowing a whole cast of new investors to access the token and could potentially send ETH to new ATHs above the $4,900 level.  

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