Ethereum ETF Approval Speculation Drives ETH to Two-Month High
On May 20, Ethereum (ETH) saw a significant surge to a two-month high of $3,700, marking an increase of over 18%. This rise was primarily fueled by speculation surrounding the potential approval of a spot Ethereum ETF. Analyst Eric Balchunas from Bloomberg raised the odds of approval from 25% to 75%, citing political pressure on the U.S. SEC and the regulatory body’s limited interaction with ETF applicants. The heightened anticipation begs the question: will ETH see an ETF approval this year? Let’s explore the possibilities.
SEC’s Stance and Market Reactions
Eric Balchunas disclosed that the U.S. SEC is actively encouraging major exchanges like the NYSE and Nasdaq to update their ETF filings, although no official confirmation has been made. Nate Geraci highlighted that the SEC’s decision regarding the ETF is still pending. This might result in a delay in VanEck’s Ethereum spot ETF approval beyond the scheduled May 23 deadline. The SEC’s primary focus is to carefully assess the complexities and risks associated with Proof-of-Stake (PoS) cryptocurrencies before making a final decision.
Analyst Updating ETH ETF Predictions
Following the SEC’s actions, analysts Seyffart and Balchunas have adjusted their forecasts regarding the approval of spot Ether ETFs. Recent developments, including SEC filings, statements by SEC Chair Gary Gensler, and insider information hint at a potential shift in the SEC’s stance towards approving these ETFs, contrary to previous expectations of denial. The evolving political landscape, with pressure on Democrats to support crypto, is influencing these decisions. Seyffart emphasized the increasing political dimension of the issue and suggested that more related filings could follow, signaling a significant impact on the crypto community if approvals are granted.
Impact on ETH Options Expiry
Rumors surrounding the approval of an Ethereum ETF have had a substantial impact on the upcoming $3 billion ETH options expiry. Deribit, a prominent derivatives exchange, has witnessed a surge in open interest for Ether options, particularly for May 24 and May 31 contracts. The call-to-put ratio on Deribit indicates a strong preference for call options, reflecting a bullish sentiment among traders.
- If ETH maintains a price above $3,600 by May 24, only $440k in put options will be exercised, benefiting call option holders with $397 million in open interest
- For May 31, 97% of put options are priced at $3,600 or lower, becoming irrelevant if ETH trades above this level, potentially favoring call options with a net open interest of $1.92 billion at $4,550
Bullish Momentum and Market Strategies
The unexpected surge in Ether’s price has caught option traders off guard, leading to profits for those with bullish strategies. These gains are likely to be reinvested, maintaining a positive momentum for ETH post the options expiry. Traders may opt for complex strategies involving different expiry dates to optimize their positions, although predicting the exact impact remains challenging.
Furthermore, the crypto industry is being supported by proposed pro-crypto bills like the FIT21 Act and the CBDC Anti-Surveillance State Act in the United States. The lack of opposition from Democrat leaders towards these bills signals a positive outlook for crypto, with industry stakeholders endorsing the FIT21 Act to drive innovation and growth within the sector.
Hot Take: What Lies Ahead for ETH ETF Approval?
With speculation running high and market dynamics evolving rapidly, the anticipation surrounding the approval of a spot Ethereum ETF continues to drive ETH’s price to new heights. The changing regulatory landscape, combined with increasing political support for crypto, paints a promising picture for potential approvals in the near future. As the market awaits the SEC’s final decision, the crypto community remains optimistic about the potential implications of an ETF approval on Ethereum’s market performance and broader industry acceptance.
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