10Mon·

ETH Spot ETF: Is it coming or not?

Two months after the launch of the Bitcoin spot ETFs, discussions are now increasingly revolving around the question of whether the ETH spot ETFs will also be approved in mid-May, when the deadline for the first applications expires.

Bloomberg's ETF analyst Eric Balchunas currently estimates the probability of approval at 35%. He is particularly concerned that the US Securities and Exchange Commission (SEC) has barely moved so far and that applicants are not submitting adapted documents, as was regularly the case during the application process for Bitcoin ETFs.

Market participants on the decentralized prediction market Polymarket are also pricing in a 31% probability of approval in May.

The optimists see no surprise in the supposed delay to the processes.

After all, the majority of the application work that applicants can now build on for the ETH ETF was done at the time.

In addition, there is still BlackRock's almost spotless record with a quota of 576 approved ETFs out of 577 applications, as well as the ETH futures ETF approved last year, which should make it very difficult for the SEC to reject the spot ETF in accordance with last year's GBTC ruling.

Reminder: Last year, the SEC's decision to allow Grayscale to convert its bitcoin trust ($GBTC) into a spot ETF was ruled unlawful in court. The ruling contributed significantly to the final approval of Bitcoin spot ETFs.

Interesting observation: Despite the growing pessimism around ETH ETF approval and also despite the strong inflows into the BTC ETFs, Ether outperformed Bitcoin in recent weeks.

A sign that some market participants are expecting approval in May after all?

My assessment: Personally, I am not really convinced by the reasons given as to why an ETF should not be approved. In my opinion, ETH is currently rather mispriced.

The good thing is: If the pessimists are right, the downside for the general market, which would otherwise react strongly negatively to such a judgment in the short term, should be somewhat weaker.

We will know more on 23.05. at the latest.

How do you rate the chances of approval in May?

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Disclaimer: not financial advice.

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Sources:

Eric Balchunas assessment: https://twitter.com/EricBalchunas/status/1767204301372297274

Polymarket ETH ETF market: https://polymarket.com/event/ethereum-etf-approved-by-may-31?tid=1710242441834

20 Comments

Krush82@Krush82

10Mon

ETH is doomed

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Till@Stockmarketbird

10Mon

@Krush82 Warum?

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Krush82@Krush82

10Mon

@Stockmarketbird Not everyone can survive in the long term - law of nature -

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PowerWordChill@PowerWordChill

10Mon

@Krush82 and why should the chain that is one of the few profitable ones not survive? $ETH produces real yield. I think the only other chain that can do that is Tron... and that is an ETH clone.

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Krush82@Krush82

10Mon

@PowerWordChill I don't know why - I was just exaggerating what a colleague, who is a partner and Head of Digital Assets, Web3 at a renowned management consultancy and has been dealing with the topic privately and professionally for years, said to me. He would not be surprised if ETH came to a bad end. He believes that, as things stand today, $BTC $BTC and $ICP will be relevant in the long term. Of course, this is just his opinion and can also be complete bullshit..... and I don't have an opinion myself because I don't know enough about the market.

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PowerWordChill@PowerWordChill

10Mon

@Krush82 But your colleague doesn't happen to be @MrBlueSky?
😂

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Krush82@Krush82

10Mon

@PowerWordChill I don't think so 😅

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Mary D@Goldmarie

10Mon

I don't think so. Thank you for the always very fine Newsletter👏🏻

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Max@Max_Blockstories

10Mon

@Goldmarie Thank you and you're welcome!

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Stefan21@stefan_21

10Mon

Why would the SEC approve an ETF for an asset that is entirely dependent on a central party? I think the SEC will officially classify Etherium as a security.

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Max@Max_Blockstories

10Mon

@stefan_21 Which central party is that?

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Stefan21@stefan_21

10Mon

@Max_Blockstories Well, the Ethereum Foundation, which just made a switch from POW to POS, and the one that changes the inflation rate of Ether every few months on a whim.

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TheRealHansi@TheRealHansi

10Mon

ETF is not coming. Nobody needs ETH.

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Seiky@Seiky

10Mon

ETH is not decentralized and therefore not a commodity. ETH had more than half pre-mined. ETH is heavily dependent on centralized entities. It is not a commodity, not even remotely.

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Staatsmann@Staatsmann

10Mon

The thing will probably not be approved in Germany anyway, and probably not in the EU either.

As an ETF, it needs real shares in companies.
As an ETN, it would be a bond.
As an ETC, ETH would have to be a commodity.
At most, it would be possible as an ETP to track performance.

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Till@Stockmarketbird

10Mon

@Staatsmann Not only presumably. Throughout the EU, a fund / ETF may not consist of a single instrument.

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Max@Max_Blockstories

10Mon

@Staatsmann Correct. That is why there are already corresponding ETPs

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DerDanner@Therapeut

10Mon

Yes is approved

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Mar@MaCF

10Mon

I lack the knowledge about this ETF to understand the meaning. That's why I can only give my limited opinion: if I believe in Etherium, I buy Etherium and not an ETF? Why should I? It is gold and gold certificates. Why don't I buy the gold? But to each his own

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Max@Max_Blockstories

10Mon

@MaCF
1) If you are only interested in trading, an ETF is the cheapest thing you can do (i.e. in terms of transaction fees). If you are interested in self-custody, you would of course prefer to buy ETH directly.
2) The decisive factor with ETFs, however, is that they provide access to completely new demand, as we are currently seeing in the case of BTC.

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