Bloomberg Senior ETF Analyst Eric Balchunas was cautious about the likelihood of spot Ethereum ETF approval, estimating the chances at a pessimistic 25%.
“The lack of engagement seems to be purposeful vs procrastination. No positive signs/intel anywhere you look,” Balchunas said on X, pointing out the SEC’s apparent strategic non-engagement.
Re Eth ETF approval, we are holding the line at 25% odds altho tbh it is a very pessimistic 25%. The lack of engagement seems to be purposeful vs procrastination. No positive signs/intel anywhere you look. Personally hope they do approve it but it just ain’t looking good. https://t.co/nuBdCDE18L
The debate extends beyond mere speculation, with industry stakeholders offering insights into the SEC’s process. Craig Salm, Grayscale’s Chief Legal Officer, offered a contrasting perspective on the same social media platform. Salm suggested that the SEC’s silence might not inherently signal disapproval and noted that the groundwork laid during the approval process for a spot Bitcoin ETF could influence the current situation.
“In the final months leading up to Bitcoin ETF approval, Grayscale and others received positive and constructive engagement from the SEC,” Salm said.
The Grayscale representative emphasized that the core issues addressed for Bitcoin ETFs, such as creation/redemption procedures and custody concerns, apply equally to Ether, suggesting a baseline of engagement has already been established.
During discussions on the topic, there was an undercurrent of concern regarding the SEC’s stance on Ether classification. Reports indicate the regulator has issued subpoenas to crypto firms on interactions with the Ethereum Foundation, hinting at a possible intention to classify Ether as a security.
Alex Thorn, head of firmwide research at Galaxy Digital, views these developments as making the approval of spot Ether ETFs soon “extremely unlikely.”
Justin Sun, the co-founder of Tron–a smart contracting platform for deploying decentralized applications (dapps), is once again moving and shuffling millions of dollars. According to Lookonchain data on February 29, Sun reportedly transferred 100 million USDT to Binance, days after moving huge sums earlier this week.
Justin Sun moves $100 million USDT to Binance | Source: Lookonchain via X
Justin Sun Holds Millions Of ETH: Will The Co-founder Buy More?
From February 12 to 24, a wallet associated with Sun acquired 168,369 ETH for an average price of $2,894. This purchase, valued at roughly $580.5 million, currently holds an unrealized profit of around $95 million. Profitability could increase considering the sharp demand for crypto, especially top coins like Bitcoin and Ethereum, in recent days.
The Ethereum price chart shows that ETH has been on a clear uptrend, rising from around $2,200 in early February to over $3,450 when writing. At this pace, and considering the institutional interest in potent crypto assets, including ETH, the odds of the second most valuable coin stretching gains will be highly likely.
As Bitcoin inches closer to $70,000, the probability of Ethereum also tracking higher toward its all-time high of around $5,000 will be elevated.
Since ETH already owns a big stash of coins, there is speculation that the co-founder will double down, buying even more coins. The crypto community will continue watching the address until this happens and there is solid on-chain data to support the purchase.
Spot Ethereum ETFs And The Dencun Upgrade Are Key Updates
So far, optimism is high, especially among the broader altcoin community. As Bitcoin races to register new all-time highs pumped by institutional billions, eyes will be on the United States Securities and Exchange Commission (SEC). There are multiple applications for a spot Ethereum exchange-traded fund (ETF).
The agency has not provided a definitive timeline for approving or rejecting the derivative product. There is regulatory uncertainty around the status of ETH, a significant headwind that might delay or even prevent the timely authorization of this product.
Still, the community is looking forward to the next communication in May. If the spot Ethereum ETF is a go, the coin will likely rally to new all-time highs, following Bitcoin.
However, before then, eyes are on the expected implementation of Dencun. The upgrade addresses challenges facing Ethereum, including scalability. Through Dencun, Ethereum developers hope to lay the base for further throughput enhancements in the coming years.
With higher throughput, transaction fees drop, overly improving user experience. This upgrade might go a long way in cementing Ethereum’s role in crypto, wading off stiff competition from Solana and others, including the BNB Chain.
Feature image from DALLE, chart from TradingView
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Ethereum price has prodded above $2,500 on Jan. 15, further stretching its post-ETF approval lead over BTC, on-chain data trends provide vital insights into the underlying drivers.
‘Buy-the-rumor, sell-the-news’ is a popular trading strategy where speculators make acquisitions ahead of a material news event in hopes of selling at a profit when news is confirmed. BTC speculators capitalized on this trading strategy to earn historic gains in the build-up to the spot Bitcoin ETF approval verdict. Vital on-chain data trends now reveal that Ethereum (ETH) has also begun to show early signs of a similar phenomenon.
BTC speculators earned 97% profits in build-up to ETF approval
The Bitcoin spot ETF approval quest suffered multiple setbacks recently, with the U.S. Securities and Exchange Commission (SEC) citing market manipulation, oversight, and liquidity concerns.
However, on June 15, 2023, things turned positive when BlackRock (NASDAQ: BLK) officially filed for a spot Bitcoin ETF with the SEC. With over $13 trillion in assets under management (AUM), BlackRock is one of the largest asset management firms in the world.
BlackRock’s entry into the fray raised optimism about Bitcoin derivatives and effectively spun the rumor mill.
As of June 15, Blackrock’s official filing date, Bitcoin price was trading around $24,800. Within the first two weeks, speculators who aped-in early on the rumor sent Bitcoin price rallying 25% to hit $30,000 for the first time in 12 months, dating back to June 2022.
Bitcoin (BTC) price action in build-up to spot ETF Approval June 2023 – Jan. 15, 2024 | Source: TradingView
Between June 15 and Jan. 11, when the SEC eventually confirmed the news, Bitcoin price nearly doubled, moving from $24,800 to a local top of $48,890. This effectively sent speculators who bought the rumor after BlackRock’s filing into 97% profit.
Unsurprisingly, the wave of profit-taking that ensued in the aftermath of the SEC approval has sent BTC price spiraling to 15% toward $42,500 as of Jan. 15. This affirms the full cycle of the buy-the-rumor, sell-the-news cycle on the spot Bitcoin ETF narrative.
With the Bitcoin ETF now at a conclusion, investors have switched focus to Ethereum. BlackRock had filed for spot Ethereum ETF on Nov. 16. In a recent interview on Jan. 12, BlackRock CEO Larry Fink re-emphasized the value of an Ethereum spot ETF as an asset class.
While the BTC price has dropped by 3.8%, Ethereum has increased by 13.5% in the past week. In effect, ETH price has outperformed BTC by approximately 10%.
Interestingly, in addition to this divergent interplay between ETH and BTC price movement over the past week, strategic on-chain movements from Ethereum whales since Jan. 11 also corroborate early signals of the buy-the-rumor strategy playing out in ETH markets.
Ethereum whales have acquired $1.4 billion ETH since Bitcoin ETF approval verdict
On paper, Ethereum price has outperformed BTC by 10% in the past week, per Coin360 data. Looking beyond the price charts, a vital on-chain indicator has revealed that ETH’s performance has been boosted by corporate entities and high net-worth investors who increased their buy pressure shortly after the Bitcoin ETF approval verdict.
Santiment’s ‘supply held by top addresses’ metric shows a real-time snapshot of the aggregate balances currently controlled by the largest wallets in a crypto ecosystem.
The latest readings show that the top 1,000 Ethereum wallets held just 66 million ETH in cumulative balances as of Jan. 10.
But since the focus switched to spot Ethereum ETF, strategic ETH investors have entered a buying spree, adding 570,000 ETH to bring their balances to 66.5 million ETH at press time on Jan. 15.
Ethereum (ETH) supply held by top addresses | Source: Santiment
Valued at the current price of $2,540, the Ethereum ‘top holder supply’ chart above illustrates that the top 1,000 investors have added ETH coins worth $1.4 billion to their holdings in the last four days alone.
Intuitively, when the largest stakeholders increase their balances rapidly by hundreds of millions, it is interpreted as a strong bullish signal. Firstly, the buying trend among the largest stakeholders increases overall confidence within the cryptocurrency’s ecosystem.
Given that large holders are often likely to hold longer than small-holder swing traders, this accumulation puts ETH in a prime position to score historic gains in the weeks ahead.
But more importantly, the timing of the recent buying spree suggests that investors are buying the rumor with optimism that Bitcoin’s ETF approval will increase the likelihood that ongoing ETH applications will also obtain a positive verdict from the SEC.
The Ethereum Dominance (ETH.D) chart further affirms this stance. Ethereum has cornered 14% more market share between Jan. 10 and Jan. 15, while Bitcoin price has declined at a nearly identical 15%. This suggests that speculative traders are selling the news on BTC, rapidly buying the rumor ahead of a possible spot ETH ETF approval verdict.
ETH price forecast: can Ethereum reach $5,000 in 2024?
From the data points analyzed above, the large holder wallets’ accumulation and the rising ETH dominance suggest that the buy-the-rumor strategy is now widely in play in the Ethereum markets.
Given that Bitcoin had scored 97% gains in the build-up to the spot ETF approval verdict, a similar performance could put ETH in line to reach $5,000 in the instance of a positive outcome.
But in the short term, the ETH bulls will have to scale the $2,900 resistance to keep the momentum going. IntoTheBlock’s Global In/Out of the Money chart, which highlights potential support/resistance points using the historical entry prices of current ETH holders, also supports this ETH prediction
It shows that with ETH prices currently trading above $2,500, 91% of all ETH holders are now in profit positions. With the ETH ETF approval process on the front burner, these holders could increasingly become less inclined to sell.
However, the 8.5 million Ethereum holders who bought 4.1 million ETH coins could pose significant resistance if they book early profits as prices approach their break-even point.
The bears could negate this bullish prediction if the ETH price unexpectedly retreats below $2,000. However, 7.9 million investors acquired 43.4 million ETH at the maximum price of $2,039.
Considering this is the largest cluster of ETH current holders, they will likely have enough in the tank to overturn such bearish pressure.
The journey towards the approval of an Ethereum ETF in the United States has seen a new development yesterday as the US Securities and Exchange Commission (SEC) has announced a delay in the decision for Grayscale’s Ethereum trust conversion into a spot Exchange Traded Fund (ETF). The SEC has stated the need for an extended period to evaluate the proposed rule change, pushing the new deadline Grayscale to January 25, 2024.
In its reasoning, the SEC has reiterated, “The commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.” Notably, the delay comes at a time where the US agency is working with now 13 spot Bitcoin ETF applicants on presumably the final amendments before a January 10 approval.
Timeline For A Spot Ethereum ETF Approval
Despite the latest delay, the crypto community remains optimistic about the future of spot Ethereum ETFs. Bloomberg ETF analyst James Seyffart has suggested that delays are par for the course, tweeting, “Update: As expected Grayscale’s Ethereum trust filing just got delayed. It was due by 12/6/23 so this is completely normal.”
Seyffart also shared a table of all seven spot Ethereum ETF applicants: VanEck, 21Shares & ARK, Hashdex, Grayscale, Invesco & Galaxy, BlackRock, Fidelity and their deadlines. He further hinted at potential approvals by mid-2024, responding to criticisms from Adam Back, CEO of Blockstream, with “Unfortunately I think you’re gonna be really upset by June of next year.”
In response to queries about the probability of an Ethereum ETF approval following a Bitcoin ETF, Eric Balchunas of Bloomberg has indicated that the first filers, Ark and VanEck, have strong odds of approval by their final deadline on May 23, 2024, as they are expected to use the same mechanics as spot Bitcoin ETFs, and due to the fact that Ether futures have already received the green light from the US SEC.
Queried about for the odd of a spot Ethereum ETF approval, he remarked, “Not formally yet, but final deadline for the first filers Ark and VanEck is May 23rd so strong odds they approved by then given they’d be using same design as btc etfs and ether futures were Ok’d.”
The Next Deadlines
The table by Seyffart shows that the next Ethereum ETF deadlines are from December 23 to 26 for VanEck, Ark Invest and Invesco & Galaxy, followed by Hashdex on January 1. Since a spot Bitcoin ETF is very unlikely to be approved by then, delays by the SEC are more than likely for this batch of filings.
Both iShares by BlackRock and the Fidelity Ethereum Fund have their next deadlines on January 25 and January 21, 2024 respectively. These dates are crucial as they could involve either an extension, a request for more information, or a final decision.
But things only get really tense towards the final deadlines for all Ethereum ETF filers, as outlined by both Bloomberg ETF experts. With VanEck poised for May 23, 2024, and ARK Invest for May 24, 2024 and other notable filers like Hashdex Nasdaq Ethereum ETF and Grayscale’s Ethereum Trust Conversion (ETHE) scheduled for decisions by May 30, 2024, and June 18, 2024, respectively, the timeline for potential approvals is taking shape.
