The probability of approval for a spot Ethereum Exchange-Traded Fund (ETF) by the end of May has seen a remarkable decline, according to data from Polymarket, a prediction platform. This downturn contrasts starkly with the optimism surrounding spot Bitcoin ETFs earlier in the year.
Polymarket’s findings reveal a substantial drop in the likelihood of a spot Ethereum ETF approval, plummeting to a mere 28%. This figure contrasts sharply with the optimistic 74% probability predicted on January 10, when the approval of spot Bitcoin ETFs set a bullish precedent.
SEC’s approval of spot Bitcoin ETFs
In January, the US Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs, igniting speculation regarding the potential approval of spot Ethereum ETFs. Notable asset managers, including industry giants BlackRock and Fidelity, swiftly filed identical applications in anticipation of a similar regulatory green light.
However, recent developments have seen the SEC delaying its decision on BlackRock and Fidelity’s spot Ethereum ETF applications. This deferral has left market participants and observers speculating about the agency’s stance on expanding ETF offerings beyond Bitcoin.
Analysts at Ryze Labs have weighed in on the situation, offering insights into the potential factors influencing the SEC’s approach. They posit that SEC Chairman Gary Gensler’s limited authority over spot Bitcoin ETFs may afford the agency more flexibility in rejecting future non-Bitcoin ETF applications.
Gensler’s legacy and regulatory caution
The analysts at Ryze Labs suggest that Gensler’s legacy may be defined by a cautious approach to approving multiple cryptocurrency ETFs. They speculate that Gensler, mindful of his tenure as SEC Chair, may be reluctant to accelerate the adoption of the crypto asset class by greenlighting various ETF offerings.
A spot Ethereum ETF approval’s declining probability carries significant implications for investors and the broader cryptocurrency market. Investors who had anticipated diversifying their portfolios with exposure to Ethereum through ETFs may need to reassess their strategies in light of regulatory uncertainties.
The news of the dwindling probability of a spot Ethereum ETF approval has reverberated across the cryptocurrency market, prompting fluctuations in investor sentiment. Some investors may adopt a more cautious stance, while others may view the regulatory hurdles as temporary obstacles in the long-term trajectory of cryptocurrency adoption.