Bloomberg Analyst Predicts July 2 Launch for Spot Ethereum ETF

By  Pratik June 19, 2024

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Introduction

The cryptocurrency world is abuzz with speculation about the imminent launch of spot Ethereum ETFs, following a series of optimistic predictions and regulatory developments. According to Bloomberg ETF analyst Eric Balchunas, there is a possibility that these ETFs could be trading by the end of June, with the latest expected launch date around July 2, 2024.​ This announcement follows positive feedback from the U.S. SEC, which has been reviewing S-1 filings for the proposed ETFs.

The Road to Approval

The SEC's approval of spot Bitcoin ETFs in early 2024 has ignited a surge of interest in a proposed spot Ethereum ETF, with both the cryptocurrency and its price experiencing a corresponding rise. However, the SEC had shown reluctance to greenlight similar funds for Ethereum, citing concerns over the potential for fraud, the introduction of speculative bubbles into the financial sector, and the perceived risk that SEC approval might mislead less experienced investors into believing that Ethereum is safer than it actually is.

But, in months following the Spot Bitcoin ETF approval, the progress toward the launch of Ethereum ETFs has been marked by significant regulatory filings and approvals. BlackRock, the world's largest asset manager, recently updated its S-1 filing for its iShares Ethereum Trust (ETHA), a critical step toward securing the ETF's approval and subsequent trading​. In parallel, Grayscale, another major player in the crypto investment space, updated its S-3 amendment to reflect a clear prohibition on staking activities, aligning with BlackRock's approach. These updates are among the final steps required before these funds can launch for trading.​

Bloomberg Analyst Predicts Launch Date

According to senior ETF analyst Eric Balchunas at Bloomberg, the launch of a spot Ether ETF is anticipated sooner than previously expected. Balchunas mentions that the SEC has sent comments on S-1 filings to issuers, which are reportedly minor and manageable and the issuers are expected to respond within a week. He further comments that there is a good chance that the SEC will approve the filings and make them effective before the holiday weekend, aiming to clear their workload. While nothing is certain, this is Bloomberg's current best estimate.

Bloomberg's James Seyffart echoed this sentiment, highlighting that recent updates to S-1 filings suggest that the launch of spot ETH ETFs is imminent. He noted that developments typically spanning months have transpired within weeks, indicating a faster-than-expected approval process​.

The SEC's approach to these ETF approvals appears influenced by political considerations. By not outright rejecting the ETFs, the SEC avoids the appearance of being anti-crypto, a stance that has political ramifications given the growing influence and acceptance of digital assets. This nuanced approach has led to the anticipation that the SEC may expedite the approval process, drawing parallels with the swift approvals seen in Bitcoin ETF cases earlier this year​.

The Craze Around Ethereum's ETF

Ethereum's thriving ecosystem of decentralized applications (dApps) and smart contracts makes it an attractive investment, with proponents arguing that the early price increases in spot Bitcoin ETFs strengthen the case for spot Ethereum ETFs.

Spot Ethereum ETFs would offer investors a convenient, more straightforward, and transparent way to invest in Ethereum without directly owning the cryptocurrency. By holding ether tokens in their portfolios, these ETFs aim to give investors a more accurate representation of the cryptocurrency's performance. They would provide benefits such as accessibility, regulation, and diversification, but investors should be aware of potential risks, including volatility, regulatory uncertainty, and counterparty risk.

Market Impact and Industry Sentiment

The launch of spot Ethereum ETFs is expected to have a profound impact on the crypto market. Analysts predict that these ETFs will attract significant investment, driving the price of ETH to new highs. This expectation is based on the observed market response to the introduction of Bitcoin ETFs, which led to substantial price increases and heightened market activity.

Moreover, the introduction of these ETFs is likely to spur further innovation and competition among asset managers, potentially leading to the creation of a wider range of crypto-based financial products. This could include ETFs based on other cryptocurrencies or more complex financial instruments leveraging blockchain technology.

Conclusion

The predicted launch of spot Ethereum ETFs by July 2024 marks a significant milestone in the evolution of cryptocurrency as a mainstream investment asset. The combination of regulatory progress, market enthusiasm, and political considerations suggests that the approval and launch of these ETFs are imminent. Whether the launch happens by the end of June or in early July, the impact on the market and the broader acceptance of cryptocurrencies as a legitimate asset class will be profound​.