Key Points
- Standard Chartered expects Ethereum ETFs to see SEC approval this week.
- ETH ETFs could trigger between $15 billion and $45 billion in inflows in the first 12 months, pushing ETH to $8,000 by the end of 2024.
According to the latest reports, Standard Chartered is expecting the US SEC to approve Ethereum ETFs this week.
Final decisions on applications by VanEck and Ark Invest are due this Thursday, May 23, and Friday, May 24 respectively.
Standard Chartered Bank Head of FX Research and Digital Assets Research Geoff Kendrick believes that after the potential nod from the SEC, Ethereum ETFs could drive inflows between 2.39 million and 9.15 million ETH in the first 12 months post-approval.
At current prices, this would be somewhere between $15 billion and $45 billion. Kendrick also said that as a percentage of market cap, this is similar to their estimates of inflows in Bitcoin ETFs which have been previously proven to be accurate.
He continued and said that if Ethereum ETFs see an approval this week, this would lead to ETH keeping pace with BTC with the current price ratio of 5.4% holding for the rest of the year.
Kendrick also noted that they see Bitcoin reaching $150,000 by the end of 2024, and this would imply a level of $8,000 for Ethereum.
He also predicted that by the end of 2025, BTC could reach $200,000 and ETH could see prices of approximately $14,000. This is a reiteration of the price targets he offered for ETH back in March.
ETH is currently trading above $3,700, up by 22% in the past 24 hours on CoinMarketCap.
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Ethereum ETF could be approved due to political pressure
According to the latest reports, investors are currently reconsidering the chances of Ethereum seeing a green light for ETF applications. Bloomberg’s Eric Balchunas, together with James Seyffart, raised the odds for such an event from 25% to 75%.
The reason could reportedly involve political pressure, according to Balchunas.
Update: @JSeyff and I are increasing our odds of spot Ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue), so now everyone scrambling (like us everyone else assumed they’d be denied). See… https://t.co/gcxgYHz3om
— Eric Balchunas (@EricBalchunas) May 20, 2024
Recently, the crypto industry marked an important win when on May 16, the Senate passed legislation H.J.Res. 109 that would overturn the SEC’s Staff Accounting Bulletin (SAB) no. 121 that was set to prevent highly regulated financial firms from holding Bitcoin and crypto in custody.
Fidelity amends Ethereum ETF filing
After the SEC reportedly requested document updates from potential ETF issuers and exchanges, Fidelity has filed an amended S-1 application with the US SEC for its Ethereum ETF.
The asset management has reportedly filed an updated S-1 application saying that the ETF’s underlying ETH tokens will not be staked.
S-1 filings are the SEC’s required registration form for launching ETFs in the US.
The changes on Fidelity’s filing follow reports that the US SEC could approve Ethereum ETFs due to political pressure, therefore asking ETF issuers to update their filings.
Staked ETH could be classified as a security
Despite the ETH ETF approval, staked ETH could still be classified as a security, as the SEC has previously sought to classify ETH as such. Also, Ethereum’s upgrade to Proof-of-Stake (PoS) could have given the SEC another reason for this.
Galaxy Research’s head of research, Alex Thorn, said that despite the possibility that ETH ETFs could see approval this week, the SEC could see staked ETH as being a security.
Fidelity first filed the S-1 application with the SEC back on March 27, and the initial filing stated that the firm aims to stake a portion of the ETH supply.
The application also highlighted that staking introduces additional risks, such as potential funds loss via “slashing penalties” and liquidity risks as the stake is processed.
Staking rewards would also be treated as income for the fund for tax purposes, and this would lead to investors experiencing a taxable event without an associated distribution from the Trust.
