Experts speak out on how high Ethereum could go with an ETF approval
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Tomorrow is the final deadline for the approval of VanEck’s spot Ethereum exchange-traded fund (ETF) in the US, and expectations are high. Bloomberg ETF analyst James Seyffart shared that an approval movement “is happening,” despite regulatory indicators pointing out to the contrary direction until Monday.
As a result, Ethereum (ETH) leaped up to 21% in less than 48 hours and stood just 22% from its all-time high of $4,878.26, according to data aggregator CoinGecko. Bitcoin (BTC) leaped 96% in two months before the approval of the first spot Bitcoin ETFs in the US and reached its all-time high two months later.
James Davies, co-founder and CPO at Crypto Valley Exchange, highlights that Bitcoin’s case was different. “In that instance, though, everything came together – ETFs, bitcoin halving, and global inflation easing significantly – and lined up to drive Bitcoin. Ethereum has already had the crypto cycle and global market sentiment increase,” he shares.
Although Davies sees Ethereum ETF inflows having a substantial impact, propelling ETH to new all-time highs, it may be hard for Ethereum to replicate BTC’s movement after the funds’ approval. “It does, however, present a great steady growth story for the rest of 2024.”
Ruslan Lienkha, chief of markets at YouHodler, also shares the view that an Ethereum ETF might trigger a sharp ETH price increase. Moreover, this movement might not be fully priced, with significant upside yet to be seen. “If so, it will be a powerful impetus for the whole crypto market and a stimulus for other coins’ growth,” added Lienkha.
Bitfinex’s analysts believe that a spot Ethereum ETF approval could play out just like the spot Bitcoin ETF approval, which was “a sell-the-news event before a long-term bullish outlook was triggered, causing a multi-month rally.” As for inflows, they expect a similar level compatible with ETH’s market cap.
The current move from sub $3000 to $3800 is a result of the market pricing in the higher odds of an ETF approval. It is important that market participants often front-run and price in odds as absolute – implying that 75% odds of approval by Bloomberg analysts could potentially be priced in as 100%.
Marko Jurina CEO at Jumper.Exchange, pointed out that BTC rose nearly 65% following the trading of spot Bitcoin ETFs in the US. Thus, a similar movement would propel ETH “well beyond its previous all-time high.” Zentner also believes that the approval might trigger a crypto market growth for the second half of 2024.
What if…?
Despite the optimism regarding the Ethereum ETF approval, there is still a slight chance of rejection. Moreover, as highlighted by Seyffart, a good part of investors are misunderstanding the current movement since approval doesn’t translate to immediate trading. Both of these scenarios might then upset investors.
Nevertheless, in the light of recent developments, those events are now being priced out, says James Davies, from Crypto Valley Exchange. On the other hand, Jumper.Exchange’s Marko Jurina believes that both negative possible events are already priced in.
“When the spot BTC ETFs first came to market, there was actually a brief sell-off where some took profits before the rally resumed. Additionally, given the volatile nature of the market, good and bad news gives ample opportunity for market makers to create more violent price swings, so blood on the streets is definitely possible. More problematic for the ETH community (if no approval) would be the loss of a narrative as a catalyst,” Jurina added.
Moreover, a slight drop followed by a consolidation period is also a possibility, shares Ruslan Lienkha from YouHodler. “Ethereum ETF approval is just a matter of time. The SEC will approve it sooner or later after the status clarification of ETH, and it matters little if it is recognized as a commodity, security, or something else. As for now, fundamentally, nothing will change for ETH. It will remain the second crypto in the industry even without ETFs.”
Even if an unlikely rejection happens, Bitfinex analysts describe a ‘layered’ scenario, which could end in a “hard rejection” or a “soft rejection.” A hard rejection would include ETH being considered a security, while a soft rejection would be limited to ETF proposals.
“The former could be very bearish leading to a retrace of the entire move up currently. The latter could lead to more speculation continuing over a future approval on re-appeal,” Bitfinex analysts concluded.
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Author: Gino Matos
