The US Securities and Exchange Commission (SEC) has officially approved Spot Ether Exchange Traded Funds (ETFs), pending the greenlight of S-1 registration statements. However, the approval has not had a positive impact on the price of ETH, which has declined by 5% in the past 24 hours.
Crypto News Flash recently reported that the SEC has approved a series of spot Ether ETF applications, paving the way for the product to begin trading later this year. The approved ETFs include those from VanEck, BlackRock, Fidelity, and others, following requests from lawmakers to apply the same principles used for spot Bitcoin ETFs.
Bloomberg analyst James Seyffart explained that the trading of Ether ETFs depends on the completion of the S-1 registration statements, despite the approval of their 19b-4 filings. This process could take anywhere from a few days to several months. Surprisingly, the approval has not caused a surge in the price of ETH, as expected. Currently, ETH is trading at $3,692, having declined by 5% in the past 24 hours.
Zach Rynes, a crypto commentator, suggests that the lack of movement in the price is due to most investors already buying in anticipation of the approval. This theory is supported by the 22% surge in the price of ETH in the past seven days when rumors of the approval began circulating.
Analysts also point out that the ETFs have not been cleared to launch, which is another reason for the lack of movement in the price. Once the ETFs are approved, there could be a significant influx of capital, potentially reaching billions of dollars. Grayscale’s ETHE Ethereum Trust alone holds around $9 billion worth of ETH, which could be converted to the ETF, boosting the Ethereum ecosystem and potentially increasing the prices of other altcoins. According to some analysts, Ethereum could surge to as high as $4,891.70 after the launch.
However, other analysts argue that the immediate impact on the price may be slow, similar to what was observed after the approval of the spot Bitcoin ETF on January 10. Bitcoin experienced a 15% decline after the approval and took 30 days to stage a 30% surge to $51,870.
Concerns have also arisen regarding Grayscale’s plan to convert its Ethereum Trust into a spot Ether ETF. This could lead to a significant outflow, similar to what happened with its spot Bitcoin ETF. Data shows that $17.6 billion in assets have been shed by the Grayscale Bitcoin Trust since it started trading. Some experts believe that Ethereum is currently undervalued and that it only had three days to price in the ETF approval.
Crypto trader Rho Rider issued a warning about Grayscale’s announcement, noting that the re-filing of the ETHE registration could result in ETH being trapped for seven years, similar to what happened with GBTC outflows.