While the approval of spot Bitcoin ETFs was a major foot in the door for Ethereum (ETH) ETFs, the odds of spot ETH products hitting the US market soon have dwindled significantly. However, an industry pundit says that may actually be a good thing.
Dissecting The Ethereum ETF Dilemma
Spot-based Bitcoin exchange-traded funds (ETFs) were approved in January and have registered record-shattering volumes and accumulated roughly $12 billion worth of BTC.
Ethereum ETFs have taken center stage in the cryptosphere after wealth management firm Bernstein suggested last month that Ether may be the only other crypto asset to receive an ETF in 2024. A regulatory decision is expected on May 23 — which is the Securities and Exchange Commission’s (SEC) final deadline for greenlighting or rejecting the first round of filings for the ETH investment vehicle.
Notably, Bitwise CIO Matt Hougan said on March 19 that spot ETH ETFs not being approved by the SEC in May would ultimately be for the better.
“The most controversial thing I said on stage at @blockworksDAS today:
Spot Ethereum ETFs will gather more assets if they launch in December vs. if they launch in May. TradFi needs more time to digest the Bitcoin ETFs.”
Hougan has oftentimes contended that there is still plenty of room for more adoption of BTC ETFs — launched by Bitwise, BlackRock, and others — by the legacy financial world and that some target markets such as corporations and major wirehouses are still on-boarding the asset.
The CIO, however, notes that there has been considerably less interest in ether among investors.
“Aside from Bitcoin (which is in a class of its own), the most excitement I’ve heard in terms of real-world use is around stablecoins,” explained Hougan, based on his attendance at the Blockworks DAS summit. “Seems clear to me that stablecoins will be a multi-trillion market by the end of 2025.”
Low Likelihood Of Ether ETFs Launching Soon
Big-name Wall Street companies, including BlackRock, Fidelity, and Franklin Templeton, have lodged spot ether ETF applications in recent months. Yet, optimism for the SEC giving the nod to such a product has steadily dropped over the past couple of weeks.
As reported previously by ZyCrypto, Bloomberg’s ETF expert Eric Balchunas recently dropped his odds of a spot ether ETF approval by May from 70% to a mere 35%, reflecting a pessimistic stance due to a lack of engagement between the SEC and potential issuers.
Balchunas’ colleague James Seyffart is also of the same mind.
“My cautiously optimistic attitude for ETH ETFs has changed from recent months,” Seyffart posited in a Tuesday post on X. “We now believe these will ultimately be denied May 23rd for this round. The SEC hasn’t engaged with issuers on Ethereum specifics. The exact opposite of Bitcoin ETFs this fall.”
The Ethereum network recently finalized the Dencun upgrade, which reduces fees for users of layer-2 networks — a move that is boosting the token’s medium-term outlook.
