SEC Approved ETH ETFs Based on Correlation between CME ETH Future and Some ETH Spot Trading Platforms
In its analysis, the SEC found that the proposed ether-based ETPs provide sufficient investor protection and maintain market integrity.
A recent post on X shared by Wu Blockchain reveals that the SEC approved the Ethereum Spot ETF primarily due to the correlation between CME. Ethereum futures and certain Ethereum spot trading platforms.
Most of the SEC documents provide data showing the high correlation, and the surveillance and exchange agreements of CME and others can help prevent fraud and manipulation.
Why Hasn’t the ETH Price Soared?
Market commentators suggest that there may be two reasons why the price of ETH has not soared in the wake of the approval of several spot Ether ETFs.
On May 23rd, the Securities and Exchange Commission approved eight Ether ETFs for listing on their respective exchanges. Ether fell 3.4% just prior to the news, but recovered about 5% shortly thereafter and is currently trading at $3,806.
Cryptocurrency commentator Zach Rynes argues that the lack of movement reflects the notion that “everyone who wanted to buy the approval has already done so.”
Ether had already surged 29% last week after several news reports suggested that the SEC may have changed its stance on ETF approvals.
Rynes and many others also point out that while the ETFs have been approved, they have not yet been given the green light to debut, as they also require an approved S-1 registration statement, a comprehensive document that includes details about the company’s financials and risk profile, as well as the securities it plans to offer.
VanEck just filed its amended S-1 registration statement with the SEC, and analysts say it could take weeks or months for the S-1 to be approved.
Rynes believes the next big price driver for ether will be ETF inflows once they debut. “The ETFs haven’t launched yet, so the net new capital flow is yet to come,” he said.
Cryptocurrency research firm Second Mountain echoed a similar sentiment. “Expect a huge influx of capital in the first week, potentially in the billions,” Second Mountain said in a post on X on May 23, just before the SEC approved the ETFs. However, some say this may not lead to an immediate uptrend.
The price of Bitcoin fell 15% after the spot ETFs were approved for listing on January 10. According to CoinMarketCap, it took 30 days for the price to jump 30% to $51,870.
There are also lingering concerns that Grayscale’s announcement that it plans to convert its Grayscale Ethereum Trust (ETHE) into a spot Ether ETF could lead to significant selling, similar to what happened to the Grayscale Bitcoin Trust (GBTC) following the approval of spot BTC ETFs in January.
“Grayscale also refiled the ETHE registration they had withdrawn – remember the GBTC sell-off? Now it’s over $11 billion worth of ETH that has been trapped for 7 years,” warned pseudonymous cryptocurrency trader Rho Rider in a May 23 post on X.
Since spot Bitcoin ETFs began trading on January 11, GBTC has lost a total of $17.6 billion in assets, according to Farside data.
The Maxies Say Relax, Ether Is Undervalued
“ETH is incredibly undervalued,” added independent Ethereum educator Sassal, arguing that the market has only had three days to “price in” the ETF approval.
Meanwhile, Bitcoin stumbled 1.2% to $67,362 after the announcement, but recovered to $67,706.
By Leonardo Perez