Investors Expect Spot Ether ETFs Approval in May, but Price Action Could Be Subdued Compared to Bitcoin
Investors are anticipating that the Securities and Exchange Commission (SEC) will approve spot ether exchange-traded funds (ETFs) in May. However, experts believe that the price action for ether may not be as dramatic as bitcoin’s prior to its ETF approvals. JPMorgan notes that since November 9, when BlackRock first incorporated its iShares Ethereum Trust, the price of ether has rallied by 20%, while bitcoin saw a 55% surge after BlackRock filed its spot ETF application. JPMorgan analyst Kenneth Worthington suggests that the lack of hype surrounding the ether spot ETF could be due to its lower market cap and lack of “first mover advantage” compared to bitcoin.
Regulatory Ambiguity and Uncertainty Surrounding Ether
The subdued enthusiasm for the spot ether ETF may stem from regulatory ambiguity regarding ether’s status as a security. While bitcoin is considered a commodity, there is still debate over whether ether should be classified as a security due to its yield component. JPMorgan estimates a “no more than 50% chance” of spot ether ETF approval by May 23, the SEC’s final deadline to approve or deny the Ark/21Shares application. Owen Lau, an analyst at Oppenheimer, believes there is a “high likelihood” of approval but expects less hype compared to bitcoin due to ether’s smaller market cap.
Ethereum ETF Approval Milestone for Adoption
Owen Lau also states that even though the amount of new money entering the market may be less compared to bitcoin, the approval of an ether ETF is still an important milestone for increasing adoption. Additionally, following Grayscale’s court victory over the SEC last summer, there is now a playbook to reference in case the regulator rejects ether ETFs. Gustavo Schwenkler, an associate professor at Santa Clara University, believes that any excitement leading up to potential ether ETF approvals will be less speculative and that much of it is already priced into the market.
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