Coinbase’s Predictions on Spot Ethereum ETF Approval

Coinbase’s Predictions on Spot Ethereum ETF Approval

Coinbase, a popular crypto exchange, has shared its belief that the chances of the SEC approving spot Ethereum ETFs by the end of the month are between 30% to 40%. This prediction came from Coinbase Institutional Research Analyst David Han in a report published on May 15. Han mentioned that the correlation between CME futures product and spot exchange rates, which was a key factor in the approval of spot Bitcoin ETFs, could also play a role in the approval of spot Ethereum ETFs.

Han expressed optimism by stating that there is potential for a positive surprise in this decision. This sentiment was echoed by the fact that Grayscale Ethereum Trust is currently trading at a 24% discount. Despite the uncertainty surrounding the SEC’s silence on the matter, Coinbase remains positive about the approval of spot Ethereum ETFs. However, Han did mention that ETFs focusing on ETH staking might face challenges in gaining approval.

One interesting point brought up by Han is the influence of crypto in US politics. He mentioned that denying spot ETH ETFs could cost the SEC political capital, especially with the growing support for crypto in certain political circles. Ryan Sean Adams, the founder of Bankless, also highlighted the impact of political developments on the approval process. It is interesting to note that recent surveys have shown a slight preference for Trump over Biden among crypto owners.

Han pointed out that the SEC does not need to approve all spot applications simultaneously. Each spot ETH ETF application has its own decision deadline, with VanEck’s application being the first one up on May 23. However, Han also mentioned the possibility of legal action in case of a rejection, which could potentially lead to a reversal of the decision. This tactic was previously used by Grayscale in the approval of spot Bitcoin ETFs.

Bloomberg analyst Eric Balchunas provided a contrasting view to Coinbase’s optimism. He described their stance as a risky PR move, comparing it to a “way out of money call option.” Balchunas also highlighted the bravery and riskiness of making such predictions in the market. His own estimates have been more pessimistic, with low odds given for spot Ethereum ETF approvals.

The approval of spot Ethereum ETFs by the SEC remains uncertain, with different analysts and experts offering varying perspectives on the matter. The decision could have significant implications for the future of crypto trading and investment. Only time will tell whether Coinbase’s predictions will come to fruition or if the odds will lean towards a different outcome.

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