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Crypto Lifted by Ether’s Biggest Jump Since 2022 in ETF Outlook
(Bloomberg) — Cryptocurrency prices rose on signs of momentum toward U.S. approval of exchange-traded funds that invest directly in the second-largest token Ether, a shift from a more pessimistic outlook last week.
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The market-moving speculation about spot Ether ETFs is something of a redux of the investor enthusiasm that greeted comparable U.S. Bitcoin funds, whose January listing spurred a rally in the biggest digital asset to a record high.
Ether rose nearly 14% in US trading – the sharpest advance since November 2022 – before adding to gains in Asian hours to change hands at $3,666 as of 9:33am in Singapore on Tuesday. At one point, Bitcoin rose to $72,000 in light of its mid-March all-time peak of nearly $74,000.
The U.S. Securities and Exchange Commission has contacted at least one exchange and at least one potential spot Ether ETF issuer to update related 19b-4 filings, according to people familiar with the matter, who asked not to be identified because the matter It’s private. That’s a sign that the chances of SEC approval may be increasing, one of the people said. The dialogue is an unexpected move, but the green light is by no means guaranteed, the person added.
ETF Documentation
19b-4 filings are just some of the documents required. Issuers also need the regulator to sign S-1 registration statements before launching products. The decision on at least one spot Ether ETF application must be made by May 23.
An SEC spokesperson said the agency does not comment on individual filings.
Social media is abuzz with speculation that “the SEC may be more likely to lean toward a potential approval, and traders are now scrambling to take positions as many have completely ruled out even the remote possibility of an approval,” he said. Chris Newhouse, analyst at Cumberland Laboratories.
Ether is the native token of the Ethereum blockchain, the most important commercial highway in cryptography. The network is popular for decentralized financial services, where investors trade, borrow and lend through automated software protocols rather than traditional intermediaries.
Increasing Odds
On Monday, Bloomberg Intelligence ETF analyst Eric Balchunas said he and his colleague James Seyffart increased the estimated probability that a spot Ether ETF will be approved from 25% to 75%.
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Some fund companies expected a rejection because their private negotiations with the SEC had not been as robust compared to the period leading up to the launch of spot Bitcoin ETFs, Bloomberg News reported on Friday, citing two people familiar with the matter, which they asked not to be named discussing private conversations.
Caution was still evident among some investors. Ravi Doshi, head of markets at FalconX, said “the firm’s derivatives desk has seen most of our counterparties weaken the move with the expectation that the SEC will move more slowly than markets are anticipating.”
A skeptical SEC, which has otherwise cracked down on crypto, reluctantly agreed to U.S. spot Bitcoin ETFs at the start of the year, following a court reversal in 2023. Products from companies including BlackRock Inc. have amassed $58 billion in assets, one of the most successful debuts ever for a fund category.
BlackRock and Fidelity also intend to start Ether funds. The digital asset industry sees US ETFs as a way to broaden the cryptocurrency investor base. Retail investors, hedge funds, pension funds and banks have spread capital into Bitcoin funds – Millennium Management, Steven Cohen’s Point72 Asset Management and Elliott Investment Management are among the known buyers.
–With assistance from Ryan Weeks.
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