As the financial world closely watches the developments around the Ethereum ETH/USD Exchange-Traded Fund (ETF), market participants are gearing up for significant price movements.
What Happened: According to QCP Asia’s report on May 23, the impending ETH ETF decision has created a buzz, with implied volatility for Friday exceeding 100%, indicating that the market is bracing for substantial fluctuations.
Key players such as BlackRock Inc. BLK and five other issuers have recently amended their ETF filings with the Securities and Exchange Commission (SEC), and VanEck's ETF has already been listed by the Depository Trust & Clearing Corporation (DTCC).
This has led analysts to believe that an approval is highly likely, with trading expected to commence as early as next week.
Marko Jurina, CEO of Jumper.Exchange, said, "If the BTC ETF approval was any indication, we could see a similar 60% rally from here."
QCP Asia’s trade idea further supports this optimistic outlook.
The likelihood of ETH ETF approval under SEC Chair Gary Gensler‘s tenure appears strong.
Both Jurina and James Davies, co-founder and CPO at Crypto Valley Exchange, note that recent regulatory developments, such as minor requested changes to 19b-4 forms, suggest that approval is imminent.
"Everyone sees that ETH ETFs will pass very soon," said Davies. "The SEC is following its pre-approval process, asking submitters to make minor changes to their applications, which they would not do if this was clearly not passing."
In the event of a denial, the most probable outcome would be a series of lawsuits, similar to the reaction following the initial rejections of spot Bitcoin ETFs.
Applicants would likely challenge the SEC’s decision in court.
Davies explained, "If BTC ETF approval story is informative, we will likely get ETH ETF approval as a result of legal challenges."
Why It Matters: The approval of ETH ETFs holds significant relevance as it would enhance the credibility of the cryptocurrency industry.
"ETFs increase the level of credibility of the industry, given that the SEC is giving a stamp of approval," noted Jurina.
This would attract larger funds and institutional investors who have been hesitant due to regulatory uncertainties, potentially leading to substantial capital inflows and bolstering Ethereum's market position.
While the approval of ETH ETFs could pave the way for other crypto asset ETFs, analysts like Davies believe that Ethereum’s unique status in the industry makes it an outlier.
"The broader adoption of ETFs for other digital assets would require significant market infrastructure development," said Davies.
"We need to see places to instantly hedge other tokens in a cost-effective manner, with depth, to enable ETF providers to manage risks."
If ETH ETFs are approved, the repercussions for the ETH token price could be substantial.
"The market is not anticipating a rejection," Jurina commented, indicating that political ramifications could also arise if the SEC were to deny the applications at this stage.
"Household names have filed for ETFs and committed significant capital to their building. If the SEC were to reject at this late stage, it would be a shock and create political repercussions, which it is apparent Biden would not want to see at the present moment."
What’s Next: For those looking to stay ahead of these developments and gain deeper insights into the future of digital assets, Benzinga’s Future of Digital Assets event on Nov. 19 will be a crucial gathering.
Industry leaders and investors will converge to discuss the regulatory landscape, investment strategies, and the evolving digital asset market, providing a comprehensive overview of what lies ahead in this dynamic field.
Read Next: VanEck’s Spot Ethereum ETF Listed On DTCC As SEC Decision Looms
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