Original source: DLNews
Compiled by: Odaily Planet Daily Wenser
Editor's note: Recently, the trend of Ethereum spot ETF has reversed, which has attracted great attention from the market and regulators. Based on the optimism of the US approval of the Ethereum spot ETF, the price of Ethereum has risen sharply this week, and the current price is $3,807. Although the reasons behind the sharp change of direction are still controversial, market observers and senior cryptocurrency practitioners generally believe that the approval of regulators will have different degrees of impact on Ethereum and other cryptocurrencies. It is reported that asset management company VanEck is the first brokerage firm to submit an application for Ethereum spot ETF to the US Securities and Exchange Commission (SEC). The result of the 19b-4 document application will be produced around 4 am on May 24th, Beijing time. Let's take a look at the views of 7 senior industry insiders on this matter and its subsequent impact.
Digital Asset Management Company: Galaxy Digital
Mike Novogratz, CEO of Galaxy Digital, said in an interview with CNBC that the "massive" shift in Washington in the past 24 hours has overturned the Ethereum spot ETF game. He believes that if the SEC's changes are politically motivated, then "this will be a huge shift." "If that's the case, the price (in the cryptocurrency market) will be much higher than it is now."
In addition, he said that as Trump leads Biden in the polls and cryptocurrency super PACs have raised more than $150 million to promote candidates who support the industry (such as in some swing states), Democrats' aversion to cryptocurrency has become increasingly untenable. "In fact, it was Democratic Massachusetts Senator Elizabeth Warren and a small group of people who tied the Democrats to this matter."
Novogratz added: “There is no reason to turn cryptocurrency as a technology into an outright political issue.”
Ethereum Core Organization: Consensys
Joseph Lubin, co-founder of Ethereum and founder of crypto infrastructure firm Consensys, said he expects “massive demand” for Ethereum, which could lead to a supply squeeze and push up its price.
Lubin told the publication that institutions that have been exposed to a Bitcoin ETF “will likely want to diversify into a second approved ETF.” He said there will be “considerable natural, pent-up pressure to buy Ethereum through an ETF.” He added that there will be less supply to meet that demand than when a spot Bitcoin ETF was approved in January.
In the case of Bitcoin, authorized participants (i.e., the companies that enter into contracts to buy Bitcoin on behalf of the ETF each day when new shares are created) can simply buy idle Bitcoin on an exchange or through an over-the-counter counterparty. But on-chain data shows that more than 27% of Ethereum has been staked, meaning it is locked in contracts and earning returns for its owners.
“Most of Ethereum is either in the core protocol, DeFi systems, or DAOs (decentralized autonomous organizations),” Lubin noted. In other words, not only does Ethereum have a smaller market cap than Bitcoin — making its price more responsive to capital inflows — but a large portion of its supply is not available for trading in spot ETFs.
Money Management Giant: Bitwise
“Cryptocurrency is going mainstream, a development that will propel cryptocurrencies to new all-time highs,” Matt Hougan, chief investment officer at asset management giant Bitwise, wrote in a blog post this week.
But Hougan said the catalyst wasn’t sudden optimism about an Ethereum spot ETF. “A big thing happened in Washington: a bipartisan group of senators and representatives passed the first pro-crypto legislation in Washington’s history.” He mentioned the bill to repeal the SEC’s SAB 121 policy, which imposed strict rules on cryptocurrency custody.
“Whether or not we get approval for an Ethereum spot ETF, the latest sign of support for cryptocurrency in Washington, D.C. is clear,” Hougan added.
Blockchain infrastructure platform: Swarm
Timo Lehes, co-founder of blockchain infrastructure platform Swarm, believes that once an Ethereum spot ETF is approved, "capital will flow into" Ethereum in large quantities.
“Once you have an allocation to Bitcoin, you will also look for other things as part of your portfolio diversification,” he told the media. “Investors will naturally choose ETH as the next important position allocation of crypto assets. Although this may pale in comparison to the Bitcoin spot ETF launched in January this year, the inflow of funds will still be enough to change its price trend.”
Data analysis platform: Kaiko
Adam McCarthy, an analyst at data analysis platform Kaiko, said that option traders who flocked around call options are now looking for higher returns, but investors should remain cautious. He said: "The demand for Hong Kong Ethereum spot ETFs is not large, and it has experienced net outflows for several days. The lack of a pledge channel for Ethereum spot ETFs is also an important factor and may further affect demand."
He suggested keeping an eye on Grayscale’s $9 billion ETHE product, “if it starts to have a large outflow, that will have a significant impact on the price of Ethereum.”
Analyst Research Company: Bernstein
Approval of a spot Ethereum ETF would send Ethereum prices soaring by about 75% to as high as $6,600, according to estimates by Gautam Chhugani and Mahika Sapra, analysts at $725 billion Bernstein research firm.
They noted that the SEC approved a similar bitcoin spot ETF product in January, an event that sparked a roughly 75% increase in bitcoin prices to an all-time high of $73,000 three months later.
“We expect similar price action for ETH,” Chhugani and Sapra said in a report this week.
It is worth mentioning that in November 2021, Ethereum set an all-time high of US$4,878. If it can really reach US$6,600, the price of Ethereum will break its historical high again.
