On May 20, news broke that the SEC had asked exchanges to expedite updates to their 19B-4 filings for spot ETH ETFs. The move sparked speculation that the SEC was more favorable to ETF applications ahead of Thursday’s approval deadline.
While it’s not a done deal, Bloomberg ETF analysts Eric Balchunas and James Seyffart raised the odds of ETH ETF approval from 25% to 75%.
The reason? Political and economic pressures. This is an election year, and growing demand for alternative assets like cryptocurrencies (see BTC ETF) will be a positive catalyst for the cryptocurrency market.
The prediction market (usually a bellwether of outcomes) reacted sharply to the news: after a tragic trend from 75% approval rate in January to 0%, we’re back to 66% in just one hour.
So, what does this mean? What do we do next?
The last time we saw something like this was when a Bitcoin ETF was approved in January 2024, which led to a steady rise in Bitcoin prices from $30,000 in November 2023 to $46,000 in January.
This price action usually signals mainstream financial acceptance of BTC/ETH as an asset class that the market wants to participate in, giving the masses access to the underlying cryptocurrency. Bringing a lot of validation demand to the industry.
If there is strong demand for spot ETFs, the ETF must purchase the underlying currency, unlocking exposure to the asset for a large group of investors who are not typical crypto people, crypto-savvy funds, family offices or speculators. ETFs are regulated, so they are "safer".