Are you preparing for denial? The relative value of ETH compared to BTC has been significantly increased throughout the month of May. Why can't Ether grab a bid, and what impact next week's impending final ETH ETF decision might have on your bags?
THE probability The likelihood of the Securities and Exchange Commission (SEC) approving a spot ETH ETF by the end of May doubled from last week, from 7% to 14%, but that likelihood has steadily declined throughout 2024 and remains at dismal levels compared to the peak. of 76% observed at the start of the year.
Forecast market speculators were encouraged by news As of Friday, Ark Invest had removed staking from its ETH ETF spot application, seemingly suggesting that approval for non-staking applications is imminent, but participants in more liquid spot markets appear to be operating under the assumption that this announcement was nothing but Good.
While market-implied approval odds increased slightly, the ETH/BTC ratio fell another 2% over the weekend, adding to losses accumulated throughout May; it currently sits below the key 0.05 level and is buried into the 2024 lows.
According to a Fortune report Starting in March, the SEC began subpoenaing crypto companies for information about their transactions with the Ethereum Foundation shortly after the network transitioned to proof-of-stake in September 2022, hoping to classify the 'active as a title.
Yesterday, Scott Johnsson of Van Buren Capital pointed out that documents released by the SEC indicate that the agency “advises reasons for disapproval under consideration.”
Although this provision has been included in every ETH ETF spot comment request, it has been obviously absent of all spot BTC ETF filings, suggesting the SEC may disallow spot ETH ETFs on the grounds that they are improperly filed as commodity-based trusts because they actually hold securities , a point potentially proven by information received from subpoenas.
I am aware that this is widely considered a possibility, but this is your official notice that the SEC is considering the security issue of ETH in this upcoming ETF spot order. Note that this question has never been asked regarding a BTC spot/futures ETF product. pic.twitter.com/TwhqmTnJfC
–Scott Johnsson (@SGJohnsson) May 14, 2024
Despite the SEC's apparent efforts to classify Ether as a security, it is important to note that the regulator approved ETFs based on ETH commodity futures last October.
This decision came after Ethereum's transition to PoS, indicating that the SEC has already ceded jurisdiction over the asset and solidified its commodity status, as the instruments would be illegal (and therefore not traded) if the asset under – underlying was a security.
Market participants overwhelmingly expect spot ETH ETFs to be disallowed as the SEC's first final decision deadline on VanEck's application approaches on May 23; However, given the agency's prior approval of commodity futures ETFs, it is difficult to see how the SEC could justify not listing these products absent new information generated by their subpoenas.
Reminder:
1/ When the SEC authorized ETH Futures ETFs to trade on its regulated securities exchanges, it explicitly recognized the status of the underlying asset, ETH, as not being a security and outside its jurisdiction.
– Brian Quintenz (@BrianQuintenz) March 20, 2024