"Evaluating the Odds: The Diminishing Hope for an Ethereum-ETF Approval in May"
Analysts at Bloomberg have recently updated their forecasts regarding the approval of an Ethereum-based Exchange Traded Fund (Ethereum-ETF), adjusting the likelihood of its approval in May to 30%. This represents a significant downturn from their previous estimates, which ranged between 60% and 70%. The shift in perspective is attributed to a variety of factors that suggest a cooling optimism among experts about the immediate future of Ethereum-ETFs in the United States.
Eric Balchunas, a senior analyst at Bloomberg, conveyed in an interview with The Block that the chances of a spot Ethereum-ETF being approved by May 2024 are now seen at just 30%. This recalibration of expectations follows earlier, more hopeful assessments by Balchunas himself, who initially placed the likelihood at 70%, and his colleague James Seyffart, who estimated a 60-65% chance of approval.
The change in stance among analysts comes in the wake of continuous scrutiny and regulatory hurdles posed by the U.S. Securities and Exchange Commission (SEC). Seyffart commented on the evolving situation, noting, "The story with the Ethereum-ETF is the complete opposite of the approval process for spot Bitcoin-ETFs. The more we see and hear, the less optimistic I become. There are roughly 73 days left until the deadline, and we've seen virtually no progress."
A recent meeting between representatives from Coinbase and Grayscale and SEC officials to discuss the potential spot Ethereum-ETF did not seem to sway the regulator's stance, as no comments were made following the discussions. This lack of feedback from the SEC has been interpreted by some, including Balchunas, as a missed opportunity to signal a more positive outlook for the ETF's approval.
Moreover, concerns have been voiced by partners in the cryptocurrency market, such as GSR Markets Limited—a liquidity provider partnered with Ripple—regarding the slow pace of progress for the Ethereum-ETF compared to that of its Bitcoin counterparts. A statement from the company highlighted the progress made on Bitcoin-ETF applications as early as October 2023, contrasting it with the stagnant state of affairs surrounding the Ethereum-ETF.
Skepticism isn't just confined to analysts and industry insiders. Banking giant JPMorgan Chase has also expressed doubts, suggesting that the SEC's recognition of Ethereum as a commodity is a prerequisite for the launch of any new fund class, including Ethereum-ETFs. This sentiment echoes previous forecasts from investment bank TD Cowen, which anticipated the approval of spot Ethereum-ETFs by the end of 2025 or early 2026, further underscoring the challenges ahead.
The collective downturn in optimism from various quarters indicates a challenging path forward for the approval of Ethereum-ETFs. As the deadline approaches, all eyes will remain on the SEC for any signs of a shift in stance that could breathe new life into the prospects of Ethereum-based investment products.