Ethereum Spot ETF may be latency, when will the Bull Market market restart?

[TL； DR]

⭐️ According to data given by prediction market Polymarket, the probability of Ethereum Spot ETF approval at the end of May has slipped to 7% from 76% at the beginning of the year.

⭐️ Considering the Ethereum's PoS (attestation) mechanism, the potential risk of price manipulation, and the uncertainty that comes with securitization, these factors combine to drop the likelihood of Spot Ethereum ETF approval.

⭐️ The approval of the Hong Kong Ethereum Spot ETF has also opened the door to a certain extent the reality of Ethereum more large-scale adoption, and the long signals indicate that the value of Ethereum will gradually return short.

Introduction

Ethereum ETF The approval deadline has been extended to July 5, and the probability of approval by the end of this month fall to 7%, fear, uncertainty and doubt (FUD) can the Ethereum regain its strength under the shroud of emotions? This article will provide an in-depth interpretation for the benefit of readers.

Controversy over the nature of securities is difficult to assert, and the SEC postpones Spot Ethereum ETF

Recently, the United States SEC Corporation (SEC) officially issued a statement to postpone the approval decision of the Spot Ethereum ETF (Exchange Traded Fund) submitted by Galaxy Invesco to July 5.

As soon as this news was disclosed, it quickly aroused widespread attention and discussion in the market. Market sentiment is longer, some investors have expressed disappointment and dissatisfaction, and some even questioning in a mocking tone whether the SEC is waiting for the price of Ethereum to reach a certain level before approving it.

Figure 1 Source: Bloomberg

Previously, eight issuances, including VanEck and ARK Investment Management, have submitted listing applications for Ethereum price-linked ETFs to the SEC, of which VanEck and ARK's applications are scheduled to receive responses from the SEC on May 23 and 24, respectively.

Despite the SEC's approval of the Ethereum futures-type ETF last October, issuance expect the decision to pave the way for Spot ETF's application and expressed its determination to address potential regulatory issues at the meeting.

Notably, current SEC Chairman Gary Gensler was skeptical of Crypto Assets, and the Bitcoin Spot ETF's approval came after Grayscale Investments won the case. As a result, the prospect of Ethereum Spot ETF ratification is particularly complex.

The hottest long companies still plan to continue to file more long disclosures with the SEC in order to maintain communication with regulators and gain a chance of approval, but limited to the suspected nature of the Ethereum securities and the possibility of opening the door to more long speculative Crypto Assets ETF launches, the SEC does not seem to be planning to simply extend the Bitcoin Spot ETF precedent to other products at this time.

According to data from prediction market Polymarket, the probability of Ethereum Spot ETF approval at the end of May has slipped to 7% from 76% at the beginning of the year, and these forecasts and concerns reflect the market's pessimism about the Ethereum Spot ETF approval process.

Figure 2 Source: Polymarket

The market size of Ethereum Spot ETF has huge market potential

In fact, Ethereum plays a key role in the Digital Money market, second only to Bitcoin in influence and market value. In particular, the field of smart contracts created by it not only occupies an important position in the field of encryption technology, but also shows a wide range of application prospects in longest industries.

In view of this, it is not surprising that the market is concerned about the approval process of the Ethereum ETF, and at a time when the US SEC is passively responding, Hong Kong has actively embraced the encryption digital asset and recently passed the Bitcoin and Ethereum Spot ETF, becoming the only Virtual Money financial market in the world that currently operates Ethereum Spot ETF.

According to the latest data, the cumulative size of the six newly launched Crypto Assets Spot ETF in Hong Kong has climbed to HK$2.29 billion. Among them, Bitcoin ETF has a significant advantage, accounting for a whopping 85% of total assets, while Ethereum ETF is a close second with a 15% share.

As of the date of writing, according to Soso Value's data dashboard, Hong Kong Ethereum Spot ETF has maintained a single-day net subscription for four consecutive trading days, with a total of 16,740 shares, a single-day turnover of US$870,000, and total net assets of US$51.51 million. Although Bitcoin still maintains its position as a leading Crypto Assets in the market, it also shows that Ether coin has stable rise potential and market recognition.

Figure 3 Source: Soso Value

At the same time, Bitcoin ETFs in the US market saw outflows, which contrasted with the positive dynamics of the Hong Kong market.

The innovation and development momentum of the Hong Kong market in the Crypto Assets ETF sector indicates that more long Chinese and foreign fund companies will participate in the future, and the approval of the Ethereum Spot ETF has opened the door to a certain extent the actual adoption of Ethereum on a larger scale, and its potential rise scale is still not to be underestimated.

Approval latency, when will the Ethereum price turn bull?

In fact, since the beginning of the year, after the approval of the Bitcoin ETF, the market has briefly speculated on the approval of Ethereum ETF, when the price of ETH was once stronger than the BTC, but as the probability of approval is getting smaller and smaller, the price of ETH has weakened again, and it continues to passively follow the BTC, and the price performance has been in a downturn.

While the SEC slammed Ethereum's securities properties after the conversion to POS, rumors that the Ethereum Foundation was under an official investigation by a country or part of a coordinated attack on Ethereum by the SEC long wick candle, which further exacerbated Ethereum's weak market situation.

On the surface, whether Ethereum is a security has become the key to the SEC's legal positioning of it, but in fact, it is competing with other regulators for jurisdiction.

The SEC has not yet made it clear whether Ethereum is a security, otherwise the previously approved Ethereum futures ETF makes that case untenable, while Commodity Futures Trading Commission Chairman Rostin Behnam insists it is a commodity, while Patrick McHenry, chairman of the US Financial Services Committee, criticizes the SEC's investigation of Ethereum, calling on Congress to pass a clear digital asset regulation bill to drive innovation and protect consumers.

Considering the Ethereum's PoS (attestation) mechanism, the potential risk of price manipulation, and the uncertainty posed by securitization, these factors combine to drop the likelihood of Spot Ethereum ETF approval. Therefore, we may need to mentally prepare for another postponement of the Ethereum ETF.

Reflected in the market pricing, the ETH/BTC has not been able to recover after the current Exchange Rate fall broke 0.05, and the grayscale ETH premium rate of -24.78% has not changed, which seems to indicate that the Ethereum Spot ETF is likely not to pass in May, Ethereum the price is still weak in the short term Fluctuation.

Figure 4 Source: Gate.io

By extension, despite the unique advantages of long Ethereum, the market reaction is often not entirely rational, and may be influenced by people's enthusiasm for new things and panic (fear, uncertainty and doubt (FUD)), such as the recent Ethereum gas fees on the network have fall to a new low in nearly six months, and the current low fees may signal an increase in network activity in Ethereum and an upcoming Rebound in alts.

Figure 5 Source: Santiment

Knowing the past, we don't need to worry too much about the potential negative impact of the US SEC (SEC) on Ethereum. In fact, even XRP has not been successfully defined as a security by the SEC, and Ethereum's status and influence today cannot be easily shaken by any single institution, and the Web3 and encryption innovation it represents is an indisputable future trend, and its value shorts will gradually return.

by Carl Y.

This article represents the views of the author only and does not constitute any trading advice.

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