After a prolonged decade of regulatory twists and turns, the SEC has finally given the green light to spot Bitcoin ETFs, yet, the crypto world is now buzzing with anticipation as traders attempt to front-run the potential approval of Ethereum's spot ETF ahead of its looming May 23rd final decision deadline. You know how we are, we need things to look forward to, both to create FOMO, anticipation, and also to see number go up by creating Hype, it's just how we roll in the crypto space. I don't love this approach, but it is what it is, and wherever there is hype and fomo, there's an opportunity to make money.
We are already seeing how traders are trying to frontrun this ETF approval speculation, and just like we saw with Bitcoin, we might see that the approval rumor will be priced in by the time the actual approval happens.
But first let's address the skeptics who claim, "No one cares." Objectively, that's not true. The market cares, regardless of personal opinions on Ethereum. SEC Chair Gary Gensler recently stated that Bitcoin is the only crypto commodity, dampening expectations for an Ethereum ETF approval. But as I said above, the market loves narratives and we can drive a narrative until the last dumb penny comes in, and Ethereum's ETF story has helped
the ETH/BTC ratio break free from a 1.5-year downtrend.
Despite the positive momentum, not everyone is convinced that the arrival of Ethereum spot ETFs is guaranteed. Bloomberg ETF analyst Eric Balchunas places a 70% probability on approval in May. The SEC faces multiple Ethereum spot ETF applications, including those from VanEck, Ark 21Shares, and Hashdex. Digital asset lawyer Joe Carlasare believes approval is likely this year but may take longer than expected. More about this on this CoinTelegraph article.
A looming question is whether Ethereum's proof-of-stake design and yield-producing capabilities automatically classify it as a security. Gensler, while consistent in his view that Bitcoin is not a security, remains silent on Ethereum's regulatory status. Some argue that the SEC must classify Ether as a non-security before approving spot ETFs, with one JP Morgan MD giving less than a 50% chance of this happening before May.
Be that as it may, all the FUD about Ethereum's ETF getting rejected is trumped by the solidification of Ether's non-security status. The SEC has sued numerous crypto exchanges for listing assets considered securities, yet Ethereum has not been singled out. The agency's approval of ETH ETFs based on commodity futures contracts in October further establishes Ethereum's non-security classification, providing a clearer path for builders and innovators on the blockchain.
While the SEC maintains that approving spot BTC ETFs doesn't imply approval for other crypto assets, the move has set a precedent. Grayscale's previous legal victory against the SEC established that spot and futures ETF applications must receive the same regulatory treatment. Gensler underscored this point in his decision to vote for spot BTC ETF approval.
The regulatory parity achieved by Ethereum through its approved futures ETFs suggests that spot ETH ETFs are inevitable. Despite the ridiculous and insulting delay, this marks a significant win for the crypto space and, more importantly, for the future of the internet.
All I know is that if the market behaves about the ETH ETF approval in a similar way we did for the BTC ETF, we are in for a short $ETHEREUM season before the actual bull market.