ETHER surged the most in 18 months, leading a rally in digital assets, amid growing speculation that opposition is easing among regulators towards approving one or more exchange-traded funds (ETFs) that invest directly in the second-biggest cryptocurrency.
Ether rose as much as 14 per cent to about US$3,490 as of 4.49 pm in New York. Bitcoin also extended gains, climbing 5 per cent to US$69,442.
The native token of the Ethereum blockchain extended gains after Bloomberg Intelligence ETF analyst Eric Balchunas said he and his colleague James Seyffart had increased the estimated probability that a spot-Ether ETF gets approved to 75 per cent from 25 per cent.
One issuer of a potential spot-Ether ETF was asked by the Securities and Exchange Commission (SEC) on Monday (May 20) to update its 19b-4 filing, according to a source familiar with the matter who asked not to be named discussing confidential information. A 19b-4 is a form used to inform the SEC of a rule change that would allow the fund to trade on exchanges. ETF issuers need to get both that filing and an S-1 registration statement approved by the SEC before the products can officially launch.
Traders and analysts on social media “are now speculating that the SEC might be more likely to lean towards potential approval, and traders are now scrambling to put on positions since many had completely written off even the remote possibility of an approval”, said Chris Newhouse, a decentralised-finance analyst at Cumberland Labs.
“Massive spikes in volume and demand for both spot and leveraged positions are apparent in the markets and the outperformance in ETH compared to BTC points to the potential ETH ETF catalyst as a primary driver,” he added.
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After months of silence, the US SEC is poised to announce a decision on at least one application for an ETF that invests directly in Ether by May 23. Some fund companies expect a rejection because their private dialogue with the SEC has not been as robust as it had been prior to the approval of spot Bitcoin ETFs in January, Bloomberg reported on Friday, citing two sources familiar with the matter, who asked not to be named discussing private conversations.
Despite the rally on Monday, not every trader was convinced that the SEC is warming up to an Ether ETF.
“FalconX’s derivatives desk has seen the majority of our counterparties fade the move with the expectation that the SEC will move slower than the markets are anticipating,” said Ravi Doshi, head of markets at FalconX. BLOOMBERG
