The launch of the first US Bitcoin spot ETFs is a complete success for providers. Over $1 billion in inflows were recorded in the first 48 hours alone. However, the impact on the Bitcoin price for BTC investors is initially anything but positive: Due to BTC sales by ETF investors, the price fell by 8.19% in the last month alone. Nevertheless, many crypto experts assume that the Bitcoin price will benefit greatly from Bitcoin ETFs in the long term.
However, many financial experts are currently looking at the many applications that the US Securities and Exchange Commission (SEC) has received regarding Ethereum spot ETFs. While it took a decade for Bitcoin ETFs to be approved by the SEC for the US stock market, Ethereum variants are expected to be brought to market much more quickly.
SEC decisions in the coming months?
The SEC currently has applications for Ethereum spot ETFs from seven different financial institutions. The first application, which requires a decision by the SEC as early as May 23, 2024, was filed by VanEck. A decision on the Ethereum ETF application from BlackRock, the world’s largest financial institution, is expected as early as August. The process for VanEck’s application is already underway.
New deadline to obsess over just dropped
May 23rd is the final deadline for decision on VanEck’s spot ETH ETF pic.twitter.com/dgi5EVbPeQ
— Will (@WClementeIII) January 10, 2024
In order for the SEC to reject VanEck’s application, the US regulatory authority would have to be able to cite special reasons – especially in view of the fact that the Bitcoin spot ETFs can now be traded on the stock market.
At the same time, there is a strong chance that all – or at least most – applications will be approved at the same time, avoiding the first mover advantage. This has already happened with the approvals for the Bitcoin ETFs and – if the news is positive for the first application – should apply again to all applications.
For this reason, many financial experts are currently assuming that the first Ethereum spot ETFs could actually come as early as May. The only real obstacle that could currently thwart financial institutions’ plans is liquidity. The scope and size of the market was already a problem with Bitcoin spot ETFs. This argument is likely to be even more important for Ethereum, as the circulating share of Ethereum in the crypto market was reduced again after the switch from Proof-of-Work (PoW) to Proof-of-Stake (PoS).
What else could prevent Ethereum ETFs?
One of the biggest differences between Bitcoin and Ethereum is that the BTC token is mainly only used as an investment object and can therefore be held in large investment funds over the long term. Things are different with Ethereum, which functions as a currency with actual functions. There is an ever-growing number of transactions of various types that are processed daily via the Ethereum blockchain.
This makes it more difficult to lock in the existing Ethereum supply in the long term, which has already been reduced due to staking. There is lower liquidity in the crypto market, which could possibly be a reason for the SEC not to approve corresponding Ethereum spot ETFs, at least for now.
In addition, before introducing Ethereum ETFs, the SEC would first have to officially classify Ethereum as a security so that it could be traded as an ETF. However, this has not happened yet and there are rumors that a separate asset class for Ethereum could even be created to get around this problem – at least according to financial experts at JPMorgan.
Bad news also comes from Eleanor Terret – a financial journalist who works for Fox Business. In a tweet on the social media platform.
✨One $BTC Spot ETF issuer with an ETH Spot ETF application says they’re confident the…
— Eleanor Terrett (@EleanorTerrett) January 23, 2024
However, the journalist’s other sources indicate that the first approvals could come as early as the end of summer – probably in connection with BlackRock’s application.
Ethereum with a strong price correction
The Ethereum price is currently showing a strong negative trend and recorded a loss of 12.14% in the last week alone (see image below). The reasons for this include, among other things, the fact that the hype surrounding the Bitcoin spot ETFs did not trigger the desired bull market for the altcoins.
The Ethereum (ETH) price of the last 7 days (Source: CoinMarketCap)
Add to this the fact that the Ethereum Foundation sold more than $1.6 million in Ethereum just a few days ago. This was seen by many crypto investors as a sign that now might be the time to sell after the ETH token rose sharply in value following Bitcoin ETF approvals, according to data from CoinGecko. Some investors may have simply realized profits by now, increasing selling pressure in the market.
Another reason for the current downward trend is likely to be that many crypto analysts currently see bearish sentiment for Ethereum in the crypto market. This could also be related to the general market mood, which is currently rather cautious and wait-and-see. So many investors currently seem to be waiting until the metaphorical dust kicked up by the Bitcoin spot ETFs settles.
— Limbo (@CryptoLimbo_) January 22, 2024
At the time of publishing this article, Ethereum (ETH) is trading at $2,235.32, down 0.33% over the last 24 hours.