Ethereum ETF Approval Delay Results in Cryptocurrency Fall, Optimism Remains for Mid-July Recovery

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In the pulsating world of digital assets, Ethereum had briefly managed to scale dizzying heights and cross the elusive $3,500 threshold. However, recent developments brought the soaring cryptocurrency back to the $3,400 safety net. The primary reason was the unexpected deferral by Securities and Exchange Commission (SEC) in granting full approval to the Ethereum ETF applications. The formal nod is now anticipated to be given by July 8.

Market pundits had placed their bets on a July 2 decision, which quickly proved premature as the SEC sought revised applications. The revised deadline was set after Bloomberg ETF maven Erich Balchunas shared the update on social media, commenting that the SEC required more time to review the applications and provide comprehensive feedback. This led to the realignment of the timeline.

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SEC Chair Gary Gensler had earlier indicated a probable approval for Ethereum ETFs by the end of summer. The projection was grounded on the completion of the S-1 forms, a pivotal regulatory requirement in the process of launching a spot Ethereum ETF.

However, the delay has not dampened the spirits of the asset managers who view this not as a setback but a minor hurdle in their race to greenlight the inaugural US spot Ethereum ETF. Tapping directly into Ether investments, there is a palpable optimism for mid-July. This sentiment was recently echoed in a Bloomberg news piece, underscoring the constructive exchanges between the asset managers and the regulator.

Steve Kurz, the Head of Asset Management at Galaxy Digital, is not only hopeful but downright expectant of an Ethereum ETF approval within the next fortnight. Galaxy Digital has imperatively filed for an Ether ETF, emboldened by their satisfactory interactions with the Bitcoin ETF.

Where BlackRock Inc., Fidelity Investments, 21Shares and Invesco have applications under review, they are mandated to disclose their respective fund fees, a prerequisite before trading kick-starts.

Yet, a vital question lingers. Will the fervor surrounding Ether portfolios mirror the wave that the US spot-Bitcoin ETFs experienced during its launch in January, where it amassed a phenomenal $52 billion in assets?

Reports indicate that an Ethereum ETF could trigger sizeable inflows within the initial few trading months. However, matching the scale of the Bitcoin ETF could remain a tall order.

Chief Investment Officer Matt Hougan of Bitwise dangled a tantalizing possibility before investors – these new crop of ETFs could witness a staggering $15 billion in net inflows within their first 18 months.

To arrive at this conjecture, Bitcoin and Ethereum’s market values were put under the lens, with Hougan hinting that investors would correspondingly allocate resources to their respective exchange-traded products.

He drew parallels to the $56 billion US investors have already plunged into Spot Bitcoin ETPs. Given this benchmark, the Spot Ethereum ETFs would need to muster $35 billion in assets to keep pace with its Bitcoin rivals – a feat potentially achievable in around 18 months.

Moreover, the Spot Ethereum ETF has a head start, thanks to the conversion of the Grayscale Ethereum Trust (ETHE) into an ETF, tipping the scales with $10 billion in assets.

Despite these positive projections, ETH’s daily price chart currently shows a descending trend. At the latest trading update, ETH traded at $3,418, recording a significant monthly loss exceeding 9%.