Not long ago, the price of Ethereum dropped significantly, once falling below $2,900, and the ETH/BTC exchange rate also hit a three-year low. The market's attitude towards Ethereum is full of contradictions and uncertainties, and many people believe that there is little hope of approval of the Ethereum spot ETF. The main reason is the continued review of the Ethereum Foundation by the U.S. Securities and Exchange Commission (SEC) and the tough attitude of the SEC Chairman, which has led to the market being generally bearish on Ethereum.

However, on May 21, the market suddenly changed direction. There was news that the Ethereum spot ETF was expected to be approved, and the price of Ethereum rebounded rapidly, rising by more than 20% overnight, approaching $3,800. The entire market rose accordingly, Bitcoin once again broke through $71,000, and altcoins generally rose by about 10%. Since then, good news has come one after another. The SEC urged the submission of materials, and institutions such as VanEck worked overtime to prepare application documents. The market is looking forward to the official approval of the Ethereum spot ETF.

On May 24, the SEC officially approved the 19b-4 applications (Exchange Rule Changes) for spot Ethereum ETFs from the New York Stock Exchange, Chicago Board Options Exchange, and Nasdaq. Although the ETF has not yet been officially listed, this approval is undoubtedly an important step forward and a boost to the market.

Ethereum Spot ETF Approval Process

Looking back at the approval process of the Ethereum spot ETF, it can be described as "full of twists and turns."

On September 6, 2023, VanEck and 21Shares & ARK were the first to submit applications for Ethereum spot ETFs to the SEC, followed by Hashdex, Grayscale, Invesco & Galaxy, Fidelity, BlackRock and other institutions. The relatively conservative Franklin and Bitwise submitted their applications in February this year after the Bitcoin spot ETF was approved.

Although the market has high expectations for the approval of the Ethereum spot ETF, the SEC has always maintained a tough attitude. The SEC and the CFTC have been arguing over whether Ethereum is a security, especially after it switched to POS (proof of stake). SEC Chairman Gary Gensler did not make a clear statement in an interview. On March 20, there were rumors that the Ethereum Foundation was facing inquiries from authorities in an unknown country. Although the Ethereum Foundation denied it, market concerns continued to grow.

In April, the SEC issued Wells warnings to decentralized finance (DeFi) projects, further exacerbating market panic. SEC Chairman Gensler has held the view that Ethereum is a security for at least a year, which has also led to a sharp drop in the approval rate for Ethereum spot ETFs and the spread of pessimism.

Market reversal and ETF approval

However, on May 21, market sentiment reversed again. Two Bloomberg analysts published a message on the X platform saying that the probability of approval of the Ethereum spot ETF has risen to 75%, and pointed out that "the SEC may make a 180-degree turn on the Ethereum spot ETF", which triggered heated discussions in the market. On May 23, the SEC announced the approval of the 19b-4 applications of 8 spot ETFs, including VanEck, 21Shares, Invesco, Fidelity, Hashdex, BlackRock and Grayscale, further boosting market confidence.

The impact and future prospects of ETF listing

Although the approval of 19b-4 does not mean that the Ethereum spot ETF has been settled, this progress marks the regulatory authorities' recognition of the legitimacy and openness of Ethereum, freeing it from the historical burden of its securities attributes, and bringing hope for regulatory relief for other decentralized projects. In addition, the approval of the Ethereum spot ETF is expected to attract a large amount of institutional capital inflows, promoting the prosperity and development of Ethereum and even the entire crypto ecosystem.

From a political perspective, this policy shift reflects a huge change in the U.S.’s attitude toward crypto regulation. As the U.S. election approaches, the Democratic Party may hope to attract more votes by relaxing regulation on cryptocurrencies, and Wall Street’s expectations for high returns in the cryptocurrency field cannot be ignored.

Summarize

The approval process of Ethereum spot ETF shows that the crypto market is ushering in a new turning point. Although the official listing still needs to pass the further approval of S-1/S-3 forms, the approval of 19b-4 has undoubtedly injected strong confidence into the market. The next few months will be a period of accumulation of Bitcoin and Ethereum prices. With the dual benefits of liquidity and ETFs, a real bull market may be just around the corner.
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