With the stellar demand for spot Bitcoin ETFs within the first two months of launch, market analysts are hoping for a similar approval of spot Ethereum ETF. Top industry players like BlackRock and Fidelity have been flexing their muscles to get a spot Ether ETF in the market, however, the overall optimism surrounding this seems to be waning down.
What Are the Roadblocks to Ethereum ETF Approval?
Blofin Analysis has indicated that the likelihood of spot ETH ETFs receiving approval is considerably reduced due to factors such as the negative implications of the PoS mechanism, risks associated with price manipulation, and concerns regarding securitization.
In its analysis, BIoFin explains that nearly 55% of ETH supply (about 66 million coins) is held by 1,041 addresses with over 10,000 ETH each, while retail traders own less than 45%. These major holders can heavily influence ETH network upgrades due to their stake in voting rights under PoS. The SEC has also expressed concerns regarding the same in its public filings stating:
“…Are there particular features related to ether and its ecosystem, including its proof of stake consensus mechanism and concentration of control or influence by a few individuals or entities, that raise unique concerns about ether’s susceptibility to fraud and manipulation?”
In contrast, BTC holders lack voting rights and their distribution is more even, with whales owning around 40% of BTC supply and about 2,100 whale addresses as of March 2024, reducing the potential for price manipulation compared to ETH.
This #Ethereum ETF cycle feels like the opposite of #Bitcoin ETF approval odds at the moment. The more we see/hear (and don’t see/hear) the less optimistic I become.
We’re ~73 days from the deadline and there really seems to be little to no movement https://t.co/N6OpM870XF
— James Seyffart (@JSeyff) March 11, 2024
Ethereum Options Data Doesn’t Support
In the options market, potential leads have emerged. Following the announcement of the spot BTC ETFs application, both BTC and ETH far-month option skewness experienced a notable surge, peaking in November 2023. Conversely, the announcement of the spot ETH ETFs application did not prompt option traders to factor in additional bullish sentiment. The rise in far-month skewness in February is likely attributed to liquidity return rather than the ETF news, reports BioFin.
However, the report highlights that the final decision on the approval of spot ETH ETFs will not hinder the potential breakthrough of ETH price, regardless of the outcome.
In another development, Blackrock has appointed Matt Kunke, formerly a research analyst at GSR, as their Digital Assets Product Strategist. This move underscores Blackrock’s efforts to enhance its cryptocurrency ETF offerings for its customers.
The ETH price has once again surged past its crucial milestone of $4,000 and eyeing further gains as the community prepares for the Dencun upgrade ahead.
