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Ethereum ETF Approval Chance Cut to 35% Amid Divergent Market Views

Last Updated March 13, 2024 10:12 AM
Shraddha Sharma
Last Updated March 13, 2024 10:12 AM
By Shraddha Sharma
Verified by Peter Henn

Key Takeaways

  • Analysts estimate the chance of Ethereum ETF approval by May is at 35%.
  • The crypto industry cites a lack of positive indicators compared to previous Bitcoin ETF approvals.
  • Despite uncertainty surrounding ETFs, Ethereum upgrade and supply changes present potential positives for the price.

As the May 2024 deadline for the Ethereum Exchange-Traded Fund (ETF) decision draws near, it could boost digital asset investments. However, despite the success of Bitcoin ETFs, analysts are skeptical about a similar outcome for Ethereum, with recent insights indicating a decline in confidence regarding its early approval.

Despite the falling odds, ETH price can get a push from Dencun upgrade and supply cut amid a Bitcoin-led rally.

Odds of Ethereum ETF

Bloomberg analysts James Seyffart and Eric Balchunas have noted a decrease in optimism regarding the Ethereum ETF’s approval by May. They have now pegged the approval likelihood at around 35%. Their analysis points to an absence of the bullish signs that preceded Bitcoin’s spot ETF approval. While it paints a less hopeful picture for Ethereum’s immediate ETF prospects, there is still a chance it could be approved.

Fox Business’ Eleanor Terrett echoes similar sentiments. She suggests that, while approval within the year remains possible, the Securities and Exchange Commission (SEC) has yet to meaningfully engage with the applications. Nevertheless, it still leaves little time for a turnaround before the May deadline.

In a post  on X, Variant Fund Chief Legal Officer Jake Chervinsky outlined several reasons for skepticism regarding the ETF’s approval. According to him, the SEC is not only cautious about embracing crypto but also influenced by political pressures and strategic considerations. Chervinsky’s analysis suggests that the SEC’s concerns over crypto’s market dynamics and the potential for new grounds of denial could further complicate the ETF’s approval process.

Chervinsky said: “As of now appears to be making little effort to work on the details necessary for approval and listing, instead seeming to focus on diligence re: correlation, perhaps to build up its basis for denial.”

ETH Price Impact

Despite the approval headwinds, the Ethereum market continues to evolve. The Dencun upgrade and changes to its supply dynamics signal the potential for positive market movement. The recent supply adjustments have resulted in a net reduction of Ethereum’s supply, a factor that, along with technological improvements, could bolster its price in the longer term.

As per Ultrasound.money , in the seven days to March 12, the supply change for ETH is over -32,000. Additionally, the burn rate continues to be more than the issue rate, reflecting deflationary pressure.

ETH 7-Day Supply | Source: Ultrasound.money
ETH Seven-Day Supply | Source: Ultrasound.money

At press time, the highest price paid for Ethereum stands 17% lower than its all-time high in 2021. With price levels of more than $4,000, the market cap and trading volume continue to indicate an active market.

Disconnect ETH ETF Approval Delay With Price

The road to an Ethereum ETF approval appears uncertain, primarily due to the SEC’s cautious approach. However, the underlying market strength, Ethereum’s Dencun upgrade, and its deflationary supply changes suggest a resilient price action.

As the ETF May deadline approaches, the crypto hopes for a breakthrough. But in either case, ETH trajectory looks strong in the long run.

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