Ethereum (ETH), the second-largest cryptocurrency by market value, could surge nearly 70% from current levels and hit $4,000 in May as its application for a spot-based exchange-traded fund (ETF) looks set to win approval from U.S. regulators, according to a report published Thursday by Standard Chartered Bank.
Standard Chartered's team of analysts, led by head of research Geoff Kendrick, expects the U.S. Securities and Exchange Commission (SEC) to delay its decision on spot ETF applications, as it did with Bitcoin, ultimately approving them on the first final deadline. This would set May 23 as a tentative date for approval, which was the final deadline for applications submitted by asset management companies VanEck and Ark/21Shares.
The market currently underestimates the possibility of Ethereum (ETH) being approved, but Standard Chartered Bank believes that the SEC has no "fundamental reason" to treat Ethereum and Bitcoin differently. The report emphasizes that Ethereum futures are also listed on the regulated Chicago Mercantile Exchange (CME), and during the SEC's legal dispute with Ripple, the SEC did not list Ethereum as one of the 67 cryptocurrencies that the agency claimed were securities.
“We expect the ether price to track or outperform bitcoin (BTC) over a similar period leading up to the expected May 23 ratification date,” the report states.
The report also stated that if the ETF is approved, Ethereum will face less selling pressure than Bitcoin because Grayscale Ethereum Fund (ETHE) has a smaller market share in Ethereum's market capitalization than Grayscale Bitcoin Fund (GBTC), and FTX Bankruptcy Liquidation holds an even smaller share.
Bitcoin has risen 85% from around $25,000 in mid-June (when asset management giant BlackRock filed its ETF application) to around $47,000 when the spot ETF was approved on January 10. However, since the Bitcoin ETF began trading, Bitcoin has fallen from a high of $49,000 on January 11 to $38,500 last week, with market observers pointing to a massive sell-off in GBTC as the reason for its outflow of about $5 billion, which occurred after its conversion into an ETF.
The Standard Chartered report also added that the first U.S. Ethereum ETF would likely track spot ETH prices but exclude staking rewards.
