Recently, the trend of Ethereum spot ETF has reversed, attracting great attention from the market and regulators. Based on the optimism about the US approval of the Ethereum spot ETF, the price of Ethereum has risen sharply this week and is currently priced at US$3,807.
Although the reasons behind the sudden change in direction are still controversial, market observers and senior cryptocurrency practitioners generally believe that regulatory approval will have varying degrees of impact on Ethereum and other cryptocurrencies.
It is reported that asset management company VanEck is the first brokerage firm to submit an Ethereum spot ETF application to the U.S. Securities and Exchange Commission (SEC). The result of the 19b-4 document application will be produced around 4 am Beijing time on May 24. Let’s take a look at the views of 7 senior industry insiders on this matter and its subsequent impact.
Galaxy Digital CEO Mike Novogratz 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 "it would be a huge shift." "If that were the case, the prices (in the cryptocurrency market) would be much higher than they are 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 cryptocurrencies is becoming 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 media that institutions that have been exposed to a Bitcoin ETF "will likely want to diversify into a second approved ETF." He said that "there will be considerable natural, pent-up pressure to buy Ethereum through an ETF." He added that there will be less supply to meet this demand than when the spot Bitcoin ETF was approved in January.
In the case of Bitcoin, authorized participants (i.e., companies that enter into contracts to buy Bitcoin on behalf of the ETF as new shares are created each day) 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 earns a return for its owner.
“Most of Ethereum is either in the core protocol, DeFi systems, or DAOs,” Lubin noted. In other words, not only does Ethereum have a smaller market cap than Bitcoin — making its price more sensitive to 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 push 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 said, citing 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 palpable,” Hougan added.
Blockchain infrastructure platform: Swarm
Timo Lehes, co-founder of blockchain infrastructure platform Swarm, believes that once the Ethereum spot ETF is approved, "capital will flow into" Ethereum.
“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 for crypto assets. Although this may be dwarfed by the inflow of funds compared to the Bitcoin spot ETF launched in January this year, it is still 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 seeking 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 of funds, it 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% rise 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 hit 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.
Bailu Living Room: Market forecasts Ethereum will generally exceed $5,000
1. Standard Chartered predicts Ethereum’s year-end target will be $8,000
Similar to the approval of Bitcoin spot ETF, the approval of Ethereum ETF is seen by the industry as a historic moment, and the market outlook is generally optimistic.
Standard Chartered Bank predicts that the target price of Ethereum at the end of the year is $8,000, and the price of Ethereum will reach $14,000 by the end of 2025. Geoff Kendrick, head of foreign exchange research and digital asset research at Standard Chartered Bank, said: "It is expected that the Ethereum spot ETF will drive an inflow of 2.39 to 9.15 million Ethereum in the first 12 months after approval. In US dollars, it is equivalent to approximately US$15 billion to US$45 billion."
Bernstein analysts estimate: “Approval of a spot Ethereum ETF would drive its price up 75% to $6,600. The SEC approved a similar Bitcoin product in January, spurring a 75% increase in Bitcoin prices in the following weeks, and ETH price action is expected to be similar.”
Nick Forster, founder of Lyra and former Wall Street options trader, said: "According to the Lyra options market, there is about a 20% chance that Ethereum will reach $5,000 by June 28, and a 20% chance that it will exceed $5,500 by July 26."
ZhuSu: “If the Ethereum spot ETF is approved, Ethereum will rise to $5,400.”
QCP Capital: “If the approval of the BTC ETF is any guide, ETH may rise by 60% if the ETH ETF is approved. ETH’s short-term target is $4,000 and will reach $5,000 later this year.”
ConsenSys CEO said: “The approval of the Ethereum spot ETF and the resulting surge in demand for Ethereum may lead to supply constraints, thereby pushing up the price of Ethereum.”
The CEO explained that institutions that have already been exposed to Bitcoin through the newly launched Bitcoin ETF "will most likely want to diversify their investments into a second approved ETF," and that the natural, pent-up demand to buy Ether through the ETF will be considerable, but the supply to meet that demand will be less than when the Bitcoin spot ETF was approved in January of this year.
Regardless of the final result, this approval has vindicated Ethereum: Ethereum is still one of the most decentralized, tested, and technically outstanding works ever. The approval of Ethereum will also provide a reference for more other "copycats" and open up more possibilities.
2. Long-awaited by institutions
The shift in political sentiment also appears to have affected the agency’s view on such new financial instruments. Along with BlackRock, Grayscale, and Fidelity, VanEck is one of the companies that applied for the right to issue a spot Ethereum ETF. Matthew Sigel, head of digital asset research at VanEck, posted to X immediately after the announcement: “We expect the improved political backdrop will lead to more victories for digital asset investors and developers through new laws and courts, attracting investment in Bitcoin, Ethereum, and other open source blockchain software.”
“The evidence clearly demonstrates that Ethereum is a decentralized commodity, not a security,” VanEck’s Sigel wrote. “ETH’s commodity status has now been recognized in a variety of contexts, including the CFTC’s regulation of ETH futures, public statements by Commission officials, and federal court decisions.”
“Policymaker involvement in the spot approval of an Ethereum ETF shows Americans that lawmakers from both parties are taking financial innovation seriously,” said Julie Stitzel, DCG’s vice president of policy.
Coinbase Chief Legal Officer Paul Grewal, representing the largest U.S. cryptocurrency exchange, said the SEC's approval confirmed what many in the cryptocurrency industry have long believed: "This week, this day, has been like the most roller coaster I've ever seen. ETH is actually considered a commodity, and we've always known that."
