ETFs
ETH ETF Speculation This Summer – Ethereum Dominance?
Following the Securities and Exchange Commission’s (SEC) approval of Form 19b-4 for ETH ETFs in May, the SEC Chairman Gary Gensler recently announced that ETH ETFs could be fully approved by the end of summer..
Such speculations gave a glimmer of hope to crypto investors as the price of $ETH fell 7.8% last week.
If ETH ETFs are approved by September, it could fuel the global market rise. second largest cryptocurrency (by market capitalization) among others decentralized currencies.
Effects of ETH ETF approval
Shortly after the SEC approved the first round of applications (Form 19b-4) for spot ETH ETFs, $ETH soared 8.33%, from around $3.6k to 3.6k. $9,000. Its price has since decreased to around $3.5k per CoinMarketCap.
THE ETH ETF Application Follows Approval of Bitcoin ETFs on January 10, which saw Bitcoin reach greater heights – despite already being the world’s leading cryptocurrency.
Following the ETF approval, Bitcoin – previously valued at $46,000 – reached its ATH of over $75,000 on March 21. Current price of $BTC is $66.9khighlighting a 45.43% increase since the SEC authorization.
Analysts predict a similar rise in the price of $ETH if its ETFs are approved. Here’s why:
- ETFs are a familiar and highly regulated investment vehicle for financial institutions, potentially sparking a significant influx of capital into the Ethereum ecosystem.
- The SEC’s approval could ease uncertainties over Ethereum’s legal status as a security, potentially attracting more traditional investors.
- A higher value of $ETH could boost the DeFi economy, leading to greater overall activity in the Web3 domain.
According to Market Insiderthe commercial company QCP Capital estimates that the price of $ETH will increase by 60% following the expected approval of the ETF. This would bring the value of ETH to $5.6k at the time of writing.
Is ETH a commodity?
Nonetheless, the question of whether Ethereum is a security or a commodity needs to be answered and raises concerns.
The Commodity Futures Trading Commission (CFTF) perceives ETH as a commodity. In the meantime, Gensler remains discreet on its ranking.
The classification of cryptocurrencies affects how they are perceived, regulated and traded. Interestingly, former SEC Chairman Jay Clayton said Bitcoin is not a security in June 2018.
Cryptocurrencies: These are substitutes for sovereign currencies, replacing the dollar, the euro, the yen with Bitcoin. This type of currency is not a security.Jay Clayton
The Financial Innovation and Technology for the 21st Century Act could solve this problem, but it awaits Senate approval. There would be more regulatory clarity if it were to be classified as a commodity.
Crypto regulation is crucial as it helps reduce uncertainty and build investor confidence in the market.
Potential ETFs beyond ETH and BTC
Along with the possible approval of ETH ETFs, there is much speculation about whether other cryptocurrencies will follow suit.
In a recent Youtube videoChainlink’s Sergey Nazarov explains how more ETFs – beyond Bitcoin and Ethereum – could be approved in the future.
This is the sign of a very clear trend. Not only Bitcoin and not just ETH, but many other tokens will eventually get their ETFs at some point, allowing the world’s largest capital markets to interact with this financial product.Sergei Nazarov
According to Chartered standardGeoffrey Kendrick, Head of Emerging Markets Crypto and Foreign Currency Research, Solana ($SOL) and Ripple ($XRP) are the next contenders for ETF approval.
It is only a matter of time before other major digital coins receive ETF status as well.Geoffrey Kendrick
The Future of Crypto Adoption
The SEC’s approval of Ethereum ETFs would mark a pivotal moment in the blockchain space, as it would increase credibility and alleviate legal uncertainty.
Considering Ethereum is already a leader in hosting top smart contract protocols and developer activitythe potential influx of capital from ETFs could further strengthen its position in the Web3 space.
As the ecosystem evolves and its community grows due to the increase in the price of ETH, spot ETFs could not only power Ethereum, but also other smart contract platforms (like Solana and Cardano ) and cryptocurrencies.
Nonetheless, are ETH ETFs the best route for the industry, or Would a more balanced multi-chain ecosystem be better for large-scale adoption? Only time will tell.
Like always, this is important for DYOR when making a crypto investment. The blockchain space is volatile and speculative.
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