It is already clear how crucial it is for the crypto market to gain acceptance from major global institutions. In January 2024, we finally saw the approval of a Bitcoin ETF. Although we didn’t see a significant immediate impact (in fact, BTC experienced a slight drop), the influence of BlackRock and other Wall Street giants became more evident a few months later. For the first time, Bitcoin reached its all-time high (ATH) before the halving. Historically, this triggered the start of a new bull market. Let’s see how will Ethereum vs SEC battle will finish.
This cryptocurrency nearly touched the value of $72,000, marking a 75% increase since the ETF approval. Frank Sinatra would say, “The best is yet to come.” Therefore, it’s no surprise that all eyes are now on the second-largest cryptocurrency, Ethereum. Everyone eagerly awaits the SEC’s decision. The anticipation is palpable-will we witness the entry of a new cryptocurrency on Wall Street? The decision on approval or rejection is expected by May 23, 2024. In the following text, we will present what has happened in the recent period and what we can expect in both scenarios (approval or rejection).
The SEC’s Effort to Classify Ethereum as Securities
The U.S. Securities and Exchange Commission (SEC) is a federal agency within the United States that regulates all capital markets, including overseeing securities exchanges. This agency is responsible for approving or rejecting all submitted ETF applications. It is well known in the crypto community that the SEC, led by Gary Gensler, is generally opposed to accepting and expanding the crypto market.
Although many laypeople might ask, “Why wouldn’t an Ethereum ETF be approved if a Bitcoin ETF has already been approved?” the answer is straightforward. Bitcoin operates on a Proof of Work (PoW) mechanism, which relies on mining. Contrary, Ethereum transitioned from this consensus mechanism to Proof of Stake (PoS) two years ago. PoS involves “staking,” where new quantities of ETH are created as rewards for those who participate in this mechanism by locking up their ETH. The SEC focuses on this aspect, considering Ethereum as security for this reason.
However, it’s important to note that among the applicants for the Ethereum Spot ETF is the world’s largest investment bank, BlackRock. This company boasts a remarkable 99% approval rate for ETFs (with only one rejection). Many believe that this increases the likelihood of Ethereum’s ETF approval. It’s worth mentioning that the final deadline for approving BlackRock’s Spot ETF is on August 7, 2024. This raises the possibility that the SEC might delay all decisions until August to approve them simultaneously. Similarly, that happened with Bitcoin. On the other hand, we crypto enthusiasts hope to receive positive news this week. It would allow us to confidently say that we have entered the most significant bull cycle since the inception of cryptocurrency.
The News That Changed the Odds for the ETH ETF
An event on Monday evening clearly illustrates how just one positive information can ignite the entire crypto market. On May 20, the chances of the ETH ETF being approved were only 11%. That caused many crypto investors to fear the potential consequences of the SEC’s rejection. However, Bloomberg reported that the odds for Ethereum had surged to 25% and, shortly after that, to an incredible 75%!
The news itself caused a surge in the value of Ethereum. This cryptocurrency had been trading between $2,900 and $3,100 for weeks. This cryptocurrency suddenly jumped to $3,400, representing an increase of over 10%. Although many were initially unsure about the cause, the information presented by Bloomberg gave hope to all Ethereum enthusiasts that the best possible scenario might unfold. Shortly after this news release, new information emerged that somewhat explained the rise in Ethereum’s chances and also catalyzed another surge.
According to CoinDesk, the U.S. Securities and Exchange Commission (SEC) had requested applicants to update their 19B-4 filings for Ethereum ETF submissions. If you recall the situation with Bitcoin in January, a similar occurrence happened. Shortly after, the BTC ETF was approved. This information sparked a new wave of enthusiasm, propelling the value of Ethereum to around $3,700 at the time of writing this text. A staggering 20% increase in less than twelve hours!
What to Expect?
The SEC responded to inquiries regarding this update by stating that they do not respond to individual requests. This answer aligns somewhat with the SEC’s past actions. They prefer crypto ETFs to pass with as little noise and discussion as possible. While the SEC is doing everything within its power to prevent the approval of an ETH ETF, it clearly faces the world’s largest institution, BlackRock, as its competitor. Even they are aware they cannot contend against BlackRock. It is a fact that all of us crypto investors heavily rely on.
How Will SEC Decision Impact the Crypto World?
The events since Monday have shown us that many investors still hold their funds in stablecoins, waiting for a catalyst to initiate investment. The fact that Ethereum surged by 20% upon the news of the increased chance, dragging along with it a large number of altcoins that also experienced growth, indicates that we are yet to see a significant influx of funds into crypto, provided positive news is present. However, although the chances of approving the ETH ETF are currently around 75%, we cannot but consider both options.
If the SEC rejects or significantly delays the long-awaited Ethereum Spot ETF, it’s clear that we can expect a decline in Ethereum’s price and the entire crypto market. Although this means that your portfolio may lose value, many argue that such a result could be the last opportunity for investment before a correction preceding a new Bull Run, as it’s believed that the U.S. Securities and Exchange Commission would not dare to reject BlackRock in August 2024. Especially after the events of the past few days. However, the good news is that Ethereum has surged by 20% in the past 24 hours. Many experts predict that news of rejection would merely nullify this increase.
Worse Case Scenario
On the other hand, some believe that in the most radical scenario, the price of ETH could briefly drop to $2,500. We think “whales” would eagerly buy, considering the long-term projections. Similarly, a rejection is expected to cause a decline in other altcoins. So, if you are a short-term trader, we advise you to closely monitor the situation over the next few days to react promptly if the news is not optimistic.
On the other hand, if what all crypto investors are openly hoping for happens, and the SEC approves the Ethereum Spot ETF, it would signify the ultimate victory of crypto over the U.S. Securities and Exchange Commission and the beginning of a new phase of the bull market. According to many estimates, Ethereum’s price could rapidly rise in a short period. Bitcoin, for example, surged by as much as 75% in the two months following its ETF approval. Many believe that a similar outcome could occur for Ethereum. While some argue that the ETH ETF Spot won’t be as significant as BTC, many, including ourselves, disagree.
The approval of the ETH ETF will likely propel Ethereum to a new ATH shortly. Moreover, many altcoins would undoubtedly profit as well, so this approval would positively affect the overall market. It’s already evident that Pepe, one of the most pleasant surprises of the current bull run, reacted just as positively to the news of potential approval as Ethereum itself, with its value rising by over 20% in the past 12 hours. Additionally, we can expect growth for all currencies within the Ethereum ecosystem. Still, we should remember Solana and Chainlink, which could be next on the list for potential ETF approval.
Conclusion
In the crypto world, it’s tough to speak with certainty, and the best indicator is that everyone went from total pessimism regarding the Ethereum Spot ETF to incredible optimism within 12 hours. Everyone eagerly awaits May 23rd as the final deadline for the SEC’s decision, hoping for the best possible outcome, even though just yesterday, many believed it to be impossible.
However, even in the event of rejection, there’s a chance that the Ethereum ETF will be approved in early August, supported by the current political situation in the USA, which seems to favor crypto for now. Donald Trump publicly declared himself as “crypto-friendly,” forcing the opposing side to relent on their strict perspective regarding crypto, as it’s undeniable that an increasing number of people in the United States are beginning to understand the point of cryptocurrencies as a means of financial freedom for all its users.
It’s important to note that the next few days can be “aggressive,” positively or negatively, so it’s crucial to prepare for that period as best as possible. At the end of the day, you must decide if you’re satisfied with the profit and how much you’re willing to risk. Please don’t allow yourself to be overexposed, think rationally, don’t be swayed by dreams and emotions, and, like us, hope for positive news that would undoubtedly be a huge win for the entire crypto market.
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FAQ
What is the U.S. Securities and Exchange Commission (SEC)?
The SEC is a federal agency in the US that regulates and oversees capital markets and securities exchanges. Its primary goals are to protect investors, preserve market integrity, and promote transparency in trading.
What is “PoW” and “PoS” and what are the differences between these two mechanisms?
Proof of Work is a consensus mechanism in which computers must solve complex mathematical problems to validate transactions and create new blocks (mining). Proof of Stake is a mechanism that allows owners of a certain amount of cryptocurrency to create new blocks.
What is the easiest way to buy Ethereum and other cryptocurrencies?
The easiest way to buy cryptocurrencies is by using centralized exchanges such as Binance, Kraken, or Coinbase. However, it’s important to note that „lesser-known“ tokens may not be available on these leading exchanges, so it’s recommended to research which exchanges support the cryptocurrencies you want to invest in before opening an account.
What is halving?
Halving is an event in the crypto world when the reward for mining new blocks of Bitcoin is halved. This means the number of new bitcoins awarded to miners for each mined block is reduced by half. This process occurs every four years and significantly impacts the supply and demand of Bitcoin, affecting the entire crypto market.
What is “staking”?
Staking refers to holding and locking up cryptocurrencies in a digital wallet to support the functionality of the blockchain network. Individuals who stake cryptocurrencies receive rewards in the form of additional tokens as compensation for their contribution to maintaining and securing the network.
