Ethereum took a big leap last night and early this morning on reports that the Securities and Exchange Commission has asked spot ETF applicants to submit revised 19b-4 filings.
The 19b-4 filings are what firms use to propose rule changes to the SEC. In this case, applicants would need the regulator to change their rules to allow for Ethereum spot ETFs to trade on exchanges.
When this happened for spot Bitcoin ETF applicants in January, the industry was just days away from an historical approval of all 11 spot Bitcoin ETFs. There’s no guarantee, of course, that things will play out quite the same as they did then. But sentiment around this week’s upcoming deadline has taken a big swing and sent ripples throughout the market.
At the time of writing, the Ethereum price is holding above $3,600 and has seen volumes increase 219% in the past 24 hours, according to Coinglass.
Stablecoin Open Dollar founder Joseph Schiarizzi noted on Twitter last night that Ethereum increased its market capitalization—now $439 billion—in 3 minutes by as much as half that of Ethereum competitor Solana.
ETH just added half of Solana’s market cap in 3 minutes.
— JOSΞPH 🍩 (@CupOJoseph) May 20, 2024
Delegate Labs and Clusters founder Foobar noted on Twitter that the spike in price had created the largest ETHUSD daily candle in history as the price went from $3,070 to $3,661.
Meanwhile the open interest, or open ETH futures contracts, has swelled 26% in the past day to $15 billion. And call options—which are opened by optimistic traders who think the price of an asset is going to increase—outnumber put options almost 2:1, according to Coinglass.
There’s now $3 billion worth of open interest in Ethereum options that expire at the end of May and June.
The potential approval, or at least a step towards it, has gotten analysts wondering how the SEC could grant an approval while also fighting court battles over ETH’s status as a security.
“If the speculation about a 180 from SEC on the Ethereum ETFs is true, I would guess they try to thread a needle between ‘ETH’ NOT being a security and ‘staked ETH’ (or even more flimsily, ‘staking as a service ETH’) as BEING a security,” wrote Alex Thorn, head of research at Galaxy Digital, wrote on Twitter.
if the speculation about a 180 from SEC on the ethereum ETFs is true, i would guess they try to thread a needle between “ETH” NOT being a security and “staked ETH” (or even more flimsily, “staking as a service ETH”) as BEING a security.
that would be somewhat congruent with…
— Alex Thorn (@intangiblecoins) May 21, 2024
Just a month ago, Ethereum software giant Consensys filed a lawsuit against the SEC over its attempts to regulate ETH like a security. It was only a few weeks ago that court filings from that lawsuit revealed that a leaked internal memo from the SEC showed that the regulator has considered Ethereum to be a security for more than a year.
If the SEC does approve spot Ethereum ETFs to begin trading, Singapore trading firm QCP Capital predicts ETH could quickly close the gap to $4,000 and rise as high as $5,000 before the end of the year.
“If not approved, we could expect an ugly move back to 3k,” the firm wrote in a blog post. “This uncertainty has resulted in higher volatility, but the better trade might be spot-futures basis which is now yielding above 10% again.”
(Disclosure: Consensys is one of 22 investors in Decrypt)
