ETFs
ETH ETF Spot Approval: Could USD Be in Danger?
Chances of Ethereum ETF Approval Increase Dramatically Following SEC Rumors
The possibility of Ethereum (ETH) ETF approvals saw a significant change, with Bloomberg ETF analyst Eric Balchunas raising his chances of approval from 25% to 75% on Monday afternoon following speculation according to which the SEC has significantly changed its position from a probable “no”. . His latest advice is that the SEC could preliminarily approve 19b-4 filings this week, while allowing time to review each application further for S-1 approval. This rumor suggests a dramatic shift in the SEC’s approach to cryptocurrency ETFs, sparking investor interest in the potential implications for the broader market.
Ethereum prices soared 20% after the news
Following Balchunas’ tweet about the ETF approval rumors, the price of Ethereum jumped 20% the next day, reaching $3,800 from $3,150 previously. Prices remain strong mid-week, above $3,700. This sustained rise illustrates the market’s optimistic response to the news and highlights the high sensitivity of cryptocurrency prices to regulatory developments, as this story shares many similarities with the Bitcoin ETF approval process.
Will ETH ETFs be approved on Thursday?
The SEC faces a looming deadline this Thursday to rule on the VanEck ETH ETF, with implications for several other similar ETFs in line. If VanEck’s ETF gains approval, there could be a domino effect, mirroring the simultaneous approvals seen with Bitcoin ETFs. All filers recently amended their applications in accordance with the latest SEC guidance, which could increase their chances of approval.
What does this mean for the US dollar?
Although there has traditionally not been a notable correlation between Ethereum and the US dollar, the potential influx of investments into ETH could have a slight inverse impact on the value of the dollar. Since investors could sell US dollars to invest in ETH, there could be a slight depreciation of the dollar, especially if enthusiasm around ETH ETFs continues to grow. Likewise, the US dollar could see a rise if ETFs are rejected and the price of Ethereum falls. There is also long-term speculation that cryptocurrencies will eventually replace fiat currencies, and an ETH ETF would be a step in the right direction to improve the accessibility of cryptocurrencies.
In the short term, however, U.S. dollar prices will likely depend even more on macroeconomic factors such as the slowing U.S. economy and the possibility of lower interest rates this year. It is also possible that these trends, along with growing geopolitical tensions, could have an effect on demand for Ethereum if investors are deterred from dabbling in speculative assets such as cryptocurrencies. Nevertheless, the approval of an ETH ETF this week could significantly increase the price of Ethereum, while a rejection could lead to a sharp decline.