Divergent Views on Spot Ethereum ETF Approval, ETH Price Drops 5%?

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Ethereum ETF Approval Could Boost ETH to $4K – Crypto News

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1 year ago

January 31, 2024

Dripp

Standard Chartered Bank has projected a bullish rally for Ethereum, anticipating a major surge in its value following potential ETF approvals. Geoffrey Kendrick, the bank’s head of forex and digital assets research, recently highlighted May 23 as a crucial date. This is when the SEC might greenlight the first batch of U.S. spot Ethereum ETFs, aligning with a similar timeline previously seen with Bitcoin ETFs.

Anticipated SEC Strategy and Ethereum’s Market Prospects

The SEC’s approach mirrors the path of Bitcoin ETFs, starting with initial rejections before granting final approvals. Kendrick points out the importance of this date, likening it to a similar milestone for Bitcoin ETFs on January 10. He suggests that Ethereum’s price trajectory following Bitcoin’s pre-ETF approval pattern could soar as high as $4,000.

Kendrick bases his optimism on several factors. The SEC has not labeled Ethereum as a security in its legal pursuits against crypto entities. This distinction and Ethereum’s status as a regulated futures contract on the Chicago Mercantile Exchange strengthens the case for ETF approval.

Moreover, Grayscale’s Ethereum trust, poised to transition into an ETF, adds to the anticipation. Kendrick perceives no substantial reason for the SEC to deviate from the CME’s stance on Ethereum.

Resilience and Future Developments

Ethereum’s market dynamics present a resilience not seen in Bitcoin’s post-ETF approval phase. Kendrick attributes this to the relatively smaller market share of the Grayscale Ethereum Trust compared to its Bitcoin counterpart during the BTC ETF approvals. Additionally, FTX holdings within this framework are notably low, further insulating Ethereum from similar post-approval volatility.

May 23 might usher in basic Ethereum ETFs, reflecting the cryptocurrency’s price movements. However, Kendrick foresees the introduction of more complex ETFs, potentially including staking yield rewards, at a later stage.

He acknowledges the existence of such ETFs in Europe, citing the 21Shares Ethereum Staking ETP (AETH) as a prominent example. Nonetheless, he notes that higher fees associated with these ETFs often counterbalance the staking rewards.

Impact of Upcoming Ethereum Upgrades

Ethereum’s upcoming Dencun or Proto-Danksharding upgrade garners attention in Kendrick’s analysis. He believes this upgrade will bolster Ethereum’s value by enhancing the ecosystem’s efficiency. By reducing Layer 2 fees, Ethereum becomes more competitive.

Concurrently, a deceleration in staking pace is likely to sustain higher staking rewards for an extended period. These factors collectively promise a positive outlook for Ethereum’s price.