The crypto market’s rebound came unexpectedly.
On Monday afternoon, Eastern Time, Bloomberg ETF analysts wrote that the probability of the SEC approving the spot Ethereum ETF 19b-4 has increased from 25% to 75%, based on the fact that crypto investment tools are becoming an "increasingly politicized issue." Several sources revealed that the SEC is asking exchanges to speed up the update of the 19b-4 application for the spot Ethereum ETF, which has swept the community's pessimism and brought new hope for the product's eventual approval.
According to Bitcoin Market Data, after the news was released, the price of Ethereum jumped from US$3,143 to an intraday high of US$3,650, hitting a new high since mid-April, with a 24-hour increase of more than 18%.
Bitcoin rebounded to the $70,000 mark for the first time since mid-April, up $4,000 from its daily low and back below $70,000 at press time, with a 24-hour increase of nearly 5%.
Altcoin markets were broadly higher, with all but a dozen of the top 200 tokens by market cap posting gains on Monday, and only five losing more than 2%.
Pyth Network (PYTH) led the gains, up 20.4%, followed by Pendle (PENDLE) up 20.1%, Reserve Rights (RSR) up 18%, and Solana up 8% in the past 24 hours, breaking through $180. DeXe (DEXE) fell the most, down 5.4%, Chainlink (LINK) fell 2.2%, and 0x Protocol (ZRX) fell 2%.
Is there hope for Ethereum spot ETF approval?
“James Seyffart and I are raising the odds of a spot Ethereum ETF being approved to 75% (up from 25%), hearing rumors this afternoon that the SEC may do a 180 on this (increasingly political issues),” Bloomberg senior ETF analyst Eric Balchunas said on X-platform on Monday.
Another Bloomberg ETF analyst, James Seyffart, also posted his comments on the social media platform. He said: "The approval of the spot Ethereum ETF is getting better this week. We have increased the probability of spot Ethereum ETF approval to 75%. But there is a May 23 deadline for 19b-4, (Vaneck's deadline) and we also need S-1 approval. It may take several weeks to months for us to see the S-1 approved and see the Ethereum ETF go live."
Conversations between at least one potential issuer of an Ethereum spot ETF and the U.S. Securities and Exchange Commission have been making progress, according to a person familiar with the matter who requested anonymity.
Crypto stance becomes an important issue in US election
Political pressure around cryptocurrencies appeared to emerge last Thursday after a piece of pro-cryptocurrency legislation passed the U.S. Senate, winning approval from some of the body’s leading Democrats.
The Senate voted 60-38 to approve a resolution to overturn SEC Staff Accounting Bulletin 121, which would have established specific accounting standards for companies that act as cryptocurrency custodians, with several lawmakers from President Biden’s own party, including Senate Majority Leader Chuck Schumer, a Democrat, voting in favor of the measure.
“It looks like some of the politics around this may have changed very quickly,” Balchunas said, adding that cryptocurrency in general appears to be becoming a more politicized issue ahead of the upcoming U.S. election. While he said he couldn’t be completely sure, President Joe Biden’s administration may want to appear less “tough” on crypto.
The U.S. SEC must decide whether to approve or reject VanEck's spot Ethereum ETF by May 23. ARK 21Shares, Hashdex, InvescoGalaxy, BlackRock and Fidelity are also waiting for the SEC's decision.
James Seyffart said: "This is what we have heard from multiple sources, and if we are correct, we should see a bunch of documents in the next few days."
Unknown result
Jan van Eck, CEO of VanEck, said in an interview on April 9 that he personally doubted whether the SEC would approve his company's ETF application in May. Asset management company Grayscale withdrew its application for an Ethereum futures ETF on May 7, and Michael Sonnenshein announced his resignation as CEO on May 20.
David Han, an institutional research analyst at cryptocurrency exchange Coinbase, said in a monthly outlook report that the SEC is unlikely to maintain its rejection as cryptocurrency becomes a greater issue for voters ahead of the upcoming November U.S. presidential election. "As cryptocurrency begins to become an election issue, we think it is less certain that the SEC will be willing to commit the necessary political capital to support a denial," he said.
As of writing, Bitcoin is trading at $69,672 and Ethereum’s rally continues, and it remains to be seen whether the market can maintain its bullish momentum as the Federal Reserve releases the latest Federal Open Market Committee (FOMC) minutes later this week.
