Ethereum ETF Issuers "Working Overnight," Market Sentiment Remains High

Author: BitpushNews Mary Liu

Optimism continues to rise as the U.S. Securities and Exchange Commission (SEC) shows a significant shift in its stance towards potentially approving a spot Ethereum ETF, exciting crypto investors and driving the market upwards.

According to sources cited by Barron’s, SEC staff informed exchanges on Monday that they are inclined to approve these products, stating that if the "pending issues" with the ETF applications are resolved in a timely manner, approval could come as early as this week.

Reuters also reported that the SEC has asked Nasdaq, the Chicago Board Options Exchange (CBOE), and the New York Stock Exchange (NYSE) to update and amend existing application documents before the upcoming deadlines.

As of press time, Bitcoin was trading at $69,750, up 0.56% over 24 hours, while ETH was trading at $3,740, up 8.9% over 24 hours.

Stock markets also rose on Tuesday, with both the Nasdaq and SP 500 indices hitting record highs. By the close, the SP, Dow Jones, and Nasdaq indices were all up, rising 0.25%, 0.17%, and 0.22%, respectively.

The altcoin market was buoyed by Ethereum's positive developments, with the top 200 tokens by market cap rising across the board on Tuesday. Ethereum Name Service (ENS) performed the best, up 29.3%, followed by SKALE (SKL) up 20.4%, and Metis (METIS) up 16%. Reserve Rights (RSR) saw the largest decline, down 9.8%, followed by Arweave (AR) down 9.3%, and Raydium (RAY) down 7.7%.

The current total market value of cryptocurrencies is $2.57 trillion, with Bitcoin's dominance at 53.1%.

Issuers Rush to Amend Proposals Amid Internal SEC Disagreements

The first round of spot Ethereum ETF deadlines is approaching, with VanEck's deadline on May 23 and Ark Invest/21Shares' deadline on May 24.

As of press time, at least five spot Ethereum ETF issuers, including Fidelity, Invesco/Galaxy, Ark/21Shares, and Franklin Templeton, have submitted revised 19b-4 documents.

According to the revised preliminary prospectus, Grayscale has abandoned the staking proposal in its application to convert its proposed spot Ethereum ETF, and other issuers have also removed staking terms from their spot Ethereum ETF applications. Earlier on Tuesday, Fidelity withdrew the possibility of staking rewards from its S-1 registration statement.

Bloomberg ETF analyst James Seyffart said Grayscale's move was expected. Seyffart stated in a post on X: "It looks like Grayscale is removing the staking language from its documents to convert ETHE to an ETF. (This was/expected)."

Bloomberg analyst James Seyffart stated on the X platform: "There is still a long way to go before release. But these documents prove that all the rumors, speculations, and predictions are accurate. We still need to see the actual SEC approval orders for all 19b-4s, and then we need to see S-1 approval, which could take weeks or longer before the ETF launches."

According to sources cited by The Block, the SEC's trading and markets division previously informed exchanges that they would approve 19b-4 this week. Issuers responsible for S-1 contacted the SEC, but the SEC's corporate finance division reviewers seem to disagree with the agency's trading and markets division.

It is worth noting that the SEC's trading and markets division is responsible for reviewing 19b-4s, while the agency's corporate finance division is responsible for S-1s.

An informed source said: "They haven't even coordinated internally, which is why this is likely a political decision." The source added that they wouldn't be surprised if this becomes a campaign issue.

Regarding the agency's work on retracting 19b-4 comments, the source said: "The SEC's work is equivalent to writing a term paper the night before the deadline."

Analysts Optimistic: Bitcoin to Hit All-Time High by Weekend

Geoff Kendrick, head of FX research and digital assets research at Standard Chartered Bank, stated in a report that the approval of a spot Ethereum exchange-traded fund (ETF) this week would further legitimize the cryptocurrency industry, which is also beneficial for Bitcoin.

He said: "I expect Bitcoin to hit a new all-time high by the weekend, surpassing the March 14 level of $73,798."

Kendrick added that the new optimism surrounding the potential approval of a spot Ethereum ETF this week makes him more confident in his Bitcoin price targets of $150,000 by the end of 2024 and $200,000 by the end of 2025.

Market analyst Bloodgood stated: "Recently, it's been hard to go a week without shameless attacks on cryptocurrencies from Gensler, Warren, etc. The SEC's unexpected request to expedite document updates suggests that if they had already decided to reject these documents this week, they wouldn't be doing this. Therefore, the likelihood of approval has sharply increased, making this the most noteworthy headline of the week."

As for Bitcoin, Bloodgood pointed out that after hitting a local low in early May, the upward trend continues, and BTC saw two significant resistance level breakthroughs after last week's CPI data came in lower than expected.

Bloodgood outlined three possible scenarios for the future:

(1) False Breakout: It needs to be observed whether this breakout will last, as if it turns out to be a false breakout, the local low is expected to be retested;

(2) Range: If the bulls manage to hold the $69,000 level and Bitcoin fluctuates between that level and the current ATH, then altcoins will have a chance;

(3) ATH Breakout: If the bulls successfully break the ATH level, we will see more funds flow into Bitcoin, and altcoins will slowly follow, potentially approaching $80,000.

He said: "All three options are possible, and only time and charts will tell us which one will play out."