Crypto prices surge as Ether jumps on ETF outlook
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Investors are betting that the US SEC will approve spot-Ether exchange-traded funds.
PHOTO: REUTERS
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New York – Crypto prices have surged on signs of momentum towards US approval of exchange-traded funds (ETFs) investing directly in second-largest token Ether, a shift from a more downbeat outlook as recently as last week.
The market-moving speculation about spot-Ether ETFs is something of a redux of the investor enthusiasm that greeted comparable US Bitcoin funds, whose January listing spurred a rally in the biggest digital asset to a record high.
Ether rose almost 14 per cent in US trading on May 20 – the steepest advance since November 2022 – before adding to the gains in Asia to change hands at US$3,666 as at 9.33am in Singapore on May 21. Bitcoin, at one point, climbed towards US$72,000, in sight of its mid-March all-time peak of nearly US$74,000.
The US Securities and Exchange Commission (SEC) contacted at least one exchange and at least one potential spot-Ether ETF issuer to update related regulatory filings, according to people familiar with the matter, who asked not to be identified as the matter is private.
This is a sign that the odds for SEC approval may be rising, one of the people said. The SEC move is an unexpected shift, but a green light is by no means guaranteed, the person added.
A decision on at least one spot-Ether ETF application is due by May 23.
An SEC spokesperson said the agency does not comment on individual filings.
Social media is alive with speculation 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 Cumberland Labs analyst Chris Newhouse.
Ether is the native token of the Ethereum blockchain, the most important commercial highway in crypto. The network is popular for decentralised financial services, where investors trade, borrow and lend via automated software protocols rather than traditional intermediaries.
Rising odds
On May 20, Bloomberg Intelligence ETF analyst Eric Balchunas said he and colleague James Seyffart had increased the estimated probability of a spot-Ether ETF approval to 75 per cent from 25 per cent.
Caution was still evident among some investors. Mr Ravi Doshi, head of markets at FalconX, said that the company’s derivatives desk has seen the majority of its counterparties “fade the move, with the expectation that the SEC will move slower than the markets are anticipating”.
A sceptical SEC, which otherwise has been cracking down on crypto, reluctantly acquiesced to US spot-Bitcoin ETFs at the start of 2024 in the wake of a court reversal in 2023. The products from the likes of BlackRock and Fidelity Investments have amassed US$58 billion (S$78.2 billion) in assets, one of the most successful debuts ever for a fund category.
BlackRock and Fidelity are also seeking to start Ether funds. The digital asset industry views US ETFs as a way of widening crypto’s investor base.
Retail investors, hedge funds, pension funds and banks have sprinkled capital into the Bitcoin funds. Millennium Management, Elliott Investment Management and hedge fund manager Steven Cohen’s Point72 Asset Management are among the well-known buyers. BLOOMBERG
