As a professional translator, I hereby translate the news article into English:
The approval rate of Ethereum spot ETF has greatly increased due to multiple unexpected developments, causing the price of Ethereum to soar, and the market expectation is generally optimistic.
Authored by Nancy
After months of Ethereum FUD, market confidence was boosted by a large bullish candle. For two consecutive days, the approval rate of Ethereum spot ETF has significantly increased due to multiple unexpected developments, leading to a sharp rise in the price of Ethereum. The market expectation is generally optimistic. The CEO of ConsenSys even stated that the “demand flood” for Ethereum spot ETF may cause supply shortages, resulting in its price being more responsive to capital inflows. Has Ethereum entered a bull market?
Pledging content has been removed for compliance, but the approval of Ethereum spot ETF still requires time.
As the deadline for the approval of multiple Ethereum spot ETFs by the SEC approaches, the market has received a series of good news. In addition to Bloomberg ETF analyst stating that the US government’s stance on Ethereum spot ETF may undergo a complete change due to political changes, insiders revealed that the SEC has requested Nasdaq and Chicago Options Exchange to modify the applications for Ethereum spot ETF in preparation for the application process. This regulatory agency is inclined to approve Ethereum spot ETF and has provided feedback on these applications.
Currently, several issuers have accelerated the progress of their proposals. Six Ethereum spot ETF applicants have submitted revised 19b-4 documents, including VanEck, Fidelity, Franklin, Ark Invest, Grayscale, and Invesco Galaxy. The 19b-4 document is used to notify the SEC of rule changes that allow funds to be traded on exchanges. It is one of the necessary documents for ETF approval. According to Bloomberg senior analyst Eric Balchunas, it is heard that the SEC will return the revised 19b-4 documents of Ethereum spot ETF to them before 10 am local time on Wednesday. The President of ETF Store also predicted that the SEC may approve it this week or next week.
It is worth noting that, for compliance reasons, content related to pledging has been removed by issuers including Grayscale, Fidelity, ARK Invest, and 21Shares. In response, Alex Thorn, Research Director of Galaxy Digital, stated that if the speculation about the US SEC’s 180-degree turn in attitude towards Ethereum ETF is true, they may try to find a balance between the two, namely, ETH itself is not a security, but pledged ETH is a security. This is consistent with their various litigation cases and reports of investigations.
Furthermore, the listing of Franklin Templeton and VanEck’s Ethereum spot ETF on the website of DTCC (Depository Trust & Clearing Corporation) is also seen as a positive signal. However, it should be noted that the appearance in this qualification document does not represent the outcome of any outstanding regulatory or other approval processes. This is a “standard practice” for DTCC to prepare for the issuance of new potential ETFs, and the approval result is still uncertain and requires waiting for the SEC’s approval.
In addition, from the perspective of the approval time of the SEC, it may still take several months for Ethereum spot ETF to be officially launched. On the one hand, although the approval of the 19b-4 document is expected, it still needs to wait for the approval of the S-1 registration application, which is a registration statement that companies must submit to the SEC before publicly offering their shares, and there is no deadline for the approval of the document. According to Scott Johnsson, a well-known financial lawyer, based on the SEC’s review and modification of the S-1 form for Bitcoin spot ETF for nearly 4 months and the review of the S-1 form for Bitcoin futures for 5 months, it is expected that Ethereum spot ETF may also take weeks or even months during the S-1 application approval process. On the other hand, as one of the first Bitcoin spot ETFs, BlackRock’s participation is also believed to have influenced the approval process of Ethereum spot ETF to some extent, and it is reported that August 7 is the deadline for BlackRock’s application for approval.
It is worth mentioning that the approval of Ethereum spot ETF is also considered a change in the direction of crypto regulation in the United States. Jake Chervinsky, Chief Legal Officer of Variant, expressed that if Ethereum ETF is approved, it means that there has been a significant change in regulatory attitude in both the House and the Senate, which may be more important than the ETF itself. Haseeb Qureshi, a partner at Dragonfly, also stated on the X platform that the change in regulatory attitude towards Ethereum ETF indicates that the Biden administration will soften its cryptocurrency policies because they do not want to lose votes in the election competition due to “trivial matters” (referring to cryptocurrency regulation issues). In the coming months, other regulatory agencies will also show a change in attitude.
The decrease in demand and supply of spot ETF may drive up prices
For Ethereum, which has been plagued by negative news, the significantly increased possibility of approving Ethereum spot ETF undoubtedly breaks its low popularity.
In addition to Ethereum’s price reaching a new high in nearly two months, surpassing the Vanguard S&P 500 ETF and MasterCard, Ethereum-related trading activities have also surged. This includes multiple whales buying ETH during the price increase, as monitored by on-chain analyst Chain News, with most of them using leverage. In addition, Coinglass data shows that the total open interest of Ethereum futures contracts on the entire network has reached $15.6 billion, hitting a new all-time high.
The market also has a positive outlook on Ethereum’s future market trends and made optimistic predictions. On the one hand, the approval of Ethereum spot ETF will bring strong capital inflows. For example, Joe Lubin, the founder and CEO of ConsenSys, believes that institutions that have already accessed Bitcoin through newly launched Bitcoin ETF are “most likely to want to diversify their investments into the second approved ETF”. The natural and pent-up demand for buying ETH through ETFs will be considerable, making the price of ETH more sensitive to capital inflows.
Standard Chartered Bank also pointed out that the approval of Ethereum spot ETF is expected to bring in $15 billion to $45 billion of capital inflows in the first 12 months, which is equivalent to an inflow of 2.39-9.15 million ETH, which may push the price of Ethereum to $8,000 by the end of 2024. Bitcoin spot ETF has also brought in hundreds of billions of dollars of capital inflows to the Bitcoin market. According to SoSoValue data, as of May 22, the total net asset value of Bitcoin spot ETF has exceeded $58.9 billion, and the ETF net asset ratio (the proportion of market value to the total market value of Bitcoin) is 4.29%. The cumulative net inflow has exceeded $13.17 billion.
At the same time, the continuous reduction in available Ethereum supply is also considered an important factor. Coinbase stated in a recent report that Ethereum does not have a “major source of supply-side surplus” caused by token unlocking or miner selling pressure. On the contrary, both staking and Layer2 growth have been proven to be important and growing consumption channels for Ethereum liquidity. Similarly, Joe Lubin also stated that compared to when Bitcoin spot ETF was approved in January this year, the supply of ETH available to meet institutional demand for purchasing ETH will be less and a large part of it will not be available for ETF use. On-chain data shows that more than 27% (as of May 22, the total amount of Ethereum staked on the Ethereum beacon chain exceeds 32.55 million ETH) of the total ETH supply is staked on the Ethereum network. These ETH are locked in contracts, earning income for their owners. Many ETH are used for core protocols, decentralized financial systems, or DAOs.
In addition, Joe Lubin also proposed that new activities on Ethereum will lead to the destruction of a large amount of existing ETH supply over time, further limiting supply. Ultrasound data shows that since the implementation of Ethereum’s fee burning mechanism, more than 4.298 million ETH has been burned in total, and the overall supply growth rate (i.e. inflation rate) is -0.73%.
Tags:
SEC
Ethereum
Data
Bitcoin
Pledging
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Note: The views expressed in Bitpush News articles only represent the author’s opinions and do not constitute investment advice.
Original link: https://www.bitpush.news/articles/6778010
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