Asset managers in the cryptocurrency sector are currently optimistic about the potential approval of the first U.S. ETF directly investing in Ethereum by the Security and Exchange Commission (SEC). The SEC has set a deadline of July 8 for ETF applicants to submit updated paperwork and amended S-1s, with the possibility of further rounds of filings to follow. According to sources cited by Bloomberg, recent feedback from the SEC to issuers has consisted of minor questions that are currently being addressed.
Steve Kurz, Head of asset management at Galaxy Digital, has stated that an Ether ETF could potentially receive approval within the next couple of weeks. Kurz highlights that the SEC is actively engaged in the process and that the similarities between the Ethereum and Bitcoin ETF products make the approval process familiar to issuers.
Market Impact and Expectations
While major asset managers like BlackRock, Fidelity, Ark 21Shares, and Invesco have pending filings for Ethereum ETFs, many issuers have yet to disclose their fund fees, a crucial step before trading can commence. There is uncertainty regarding the potential demand for Ethereum ETFs compared to Bitcoin ETFs, which have gathered significant assets since their launch in January. Analysts predict that Ethereum ETF flows could be around 10% to 15% of Bitcoin ETF flows and that ETH prices may experience a 30% decline post-launch.
Despite optimism surrounding Ethereum’s potential growth, the cryptocurrency is currently facing challenges in the market. Ethereum prices experienced a 3% decline to an intraday low of $3,342 during Asian trading on Wednesday. The asset is currently trading 17% below its 2024 peak and 31% lower than its November 2021 all-time high. Additionally, news of a forthcoming distribution of nearly $9 billion worth of BTC related to the defunct Mt. Gox exchange has put selling pressure on Bitcoin.
The anticipation of Ethereum ETF approval by the SEC has generated optimism among asset managers in the cryptocurrency industry. While there are expectations of market growth and potential price movements, challenges remain, including uncertainties surrounding demand and price fluctuations. As the July deadline approaches, market participants will closely monitor developments in the ETF approval process and their impacts on Ethereum and the broader cryptocurrency market.
