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