Bloomberg analysts have significantly dampened their optimism regarding the approval of a spot Ethereum Exchange-Traded Fund (ETF) by May 2024. According to reports, their forecasts have plummeted from a previous range of 60-70% to a mere 30%, reflecting a shift in sentiment towards the regulatory landscape.
This news comes amidst a period of heightened anticipation surrounding Ethereum ETFs. Multiple applications from prominent financial institutions, including VanEck, Ark 21Shares, and Hashdex, are currently pending approval with the Securities and Exchange Commission (SEC), with VanEck’s decision targeted for May 23rd. The potential green light for these applications had been viewed as a potential turning point for the cryptocurrency market, similar to the recent approval of several Bitcoin ETFs.
Bloomberg ETF analyst Eric Balchunas, who had previously expressed confidence in Ethereum ETF approval by May, is likely a part of the team that revised the forecasts. Balchunas had cited the successful launches of Bitcoin ETFs as a positive precedent for Ethereum. However, the recent developments suggest that the SEC may be taking a more cautious approach towards Ethereum ETFs compared to their Bitcoin counterparts.
The reasons behind the downgraded forecasts remain unclear. The SEC has not provided any official commentary regarding the specific timeline for reviewing Ethereum ETF applications. However, it is possible that the regulatory body is seeking more clarity on issues surrounding custody, liquidity, and potential market manipulation within the Ethereum ecosystem. Ethereum, unlike Bitcoin, operates on a proof-of-stake consensus mechanism, which introduces unique regulatory considerations for the SEC.
The revised forecasts are likely to have a dampening effect on the cryptocurrency market, particularly for Ethereum. The anticipation of an easily accessible Ethereum ETF had fueled a surge in investor interest in recent months. With the approval now seemingly less probable, some investors may choose to adopt a wait-and-see approach, potentially leading to short-term price volatility.
However, the news does not necessarily signal the end of the road for Ethereum ETFs. The SEC may still choose to approve one or more of the pending applications, albeit on a later date. Additionally, continued dialogue between industry leaders and regulators could pave the way for a more streamlined approval process in the future.
For now, the spotlight remains on the SEC’s decision regarding VanEck’s application in May. While the recent developments suggest a potential delay, a positive outcome could still reignite optimism for the broader Ethereum ETF landscape.
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This article first appeared on The WIRE and is brought to you by Hyphen Digital Network
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