Markets
Ether Rallies as Market Becomes Optimistic on Ether ETF Approval
Key takeaways
- The price of ether rose more than 20% on Tuesday, before giving back some of the gains.
- The price rise appears to be linked to improving prospects for a cash exchange-traded fund (ETF).
- Crypto markets have seen renewed optimism over the approval of spot ETFs after the SEC asked exchanges to update related filings.
The price of ether (ETH), which is the native cryptocurrency of Ethereum network, rose as much as 20% early Tuesday before giving up some of the gains amid renewed hope for spot ether approval exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC).
What is behind this renewed optimism?
After the success of Bitcoin (BTC) spot exchange-traded funds that started trading in Januarycryptocurrency markets wanted a similar story for ether ETFs, but their hopes were dashed when the U.S. the regulator expressed its concerns on the status of ether as a security and revisited his previous apprehensions regarding staking.
But now it appears the SEC is moving forward with the application process.
The SEC recently requested that various exchanges update 19b-4 filings related to ether spot ETFs on an expedited basis. CoinDesk reported. This step was also undertaken during the Bitcoin ETF application approval process.
Another important development was loyalty modifying its Ether ETF application to remove staking rewards.
Ether holders can stake or lock their tokens to participate in the transaction validation process of the Ethereum network and earn rewards for doing so.
The SEC has a problem with staking because it considers it a securities offering and has sued cryptocurrency exchanges such as Binance, CoinbaseAnd Kraken, in the past for offering it as a service. Fidelity’s removal of staking from its app is seen as a move to put the regulator at ease with the ether ETF product.
And that has fueled optimism among investors and analysts.
On Monday, Bloomberg analyst Eric Balchunas reported an increase in his company’s chances of winning approval for 19b-4 filings to 75%, up from 25%. On prediction market Polymarket, the odds of approval for an ether spot ETF increased to around 60% on Tuesday, up from 10% the day before.
When will there be a final decision on Ether ETFs?
Short answer: maybe not anytime soon.
According to Bloomberg analyst James Seyffart, the SEC has until Thursday to rule on VanEck’s 19b-4 filing. After that, it would still take weeks or months to Initial S-1 registration deposits must be approved and the first spot ether ETF to hit the market.
But some progress is better than none for those waiting for the first spot ether ETF. And for some, the fine print is everything.
The removal of demand staking was expected, according to Scott Johnsson, general partner at Van Buren Capital, but the “most important signal is that there is no change in the trust structure and disclosures provided by grantors of raw materials. All signs point to the SEC making its case for ETH as follows: security,” he posted on X on Tuesday morning.