Since the BTC ETF narrative gripped the market last year, traders have been looking at ether as the next likely candidate to get a spot ETF approval in the U.S.
Will the SEC Approve an ETH ETF? Let's look at the arguments both ways...
Why Some Believe the SEC will DENY The Applications...
JPMorgan's analysts are skeptical. “While we are sympathetic... we are skeptical that the SEC will classify ether as a commodity as soon as May” lead analyst Nikolaos Panigirtzoglou said in a note to clients on Jan. 18, adding that the chances of approval of a spot ether ETF by May this year is “not higher than 50%.”
The main reason - Ethereum’s transition from the proof-of-work to proof-of-stake consensus mechanism in 2022 and the negative impact this shift has had on the blockchain’s decentralization.
Ether now looks more similar to other altcoins the SEC has classified as securities.
Why Some Think an ETH ETF Will Soon be APPROVED...
The SEC recently sued virtually every major US crypto exchange for selling unlicensed securities, providing all with a list of which coins they believe violate regulations - Ethereum was missing from all of them.
Another potentially positive sign is the approval of ether futures-based ETFs in September last year, which implies the SEC has officially deemed Ethereum a commodity.
Note that the ETH Futures ETF's that were approved last year are generally used for speculative or hedging purposes - with a 'futures' ETF no party involved needs to actually purchase any crypto. Investors instead buy contracts where they attempt to guess what the price will be on preset dates the contract expires. A true ETF, like what was just approved for bitcoin, requires the company selling shares of the ETF it to truly own the coins the ETF represents, and the only price that matters is the actual price it is trading at.
What You Can Do Now...
Both sides have some very valid points/concerns, so what does that mean? In my opinion, the main takeaway is that there are legitimate reasons to speculate ETH ETF's may be approved.
Sure, same goes for it being denied, however, current ETH holders did not invest because they believed an ETF was eventually coming, so the potential of one being denied won't cause current investors to sell. However, the potential an ETF being approved brings in new buyers and causes existing investors to buy more.
This scenario where existing investors see no reason to sell if the ETF news is bad, while the potential for good news becomes a reason for people to buy, can only result in gains as anticipation builds. Of course, a non-ETF related story that overshadows everything could happen as well - but unless it does, there may be a great short-term opportunity regardless of the final outcome.
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Author: Justin Derbek
New York News Desk
Global Crypto Press Association / Breaking Crypto News
