Kaiko Research has stated that the approval of spot Ethereum ETFs is a highly positive sign for ETH’s long-term growth despite potential short-term struggles.
The on-chain analysis firm believes the approval has removed much of the regulatory uncertainty around ETH and its status as an asset class.
ETH Bull Run Imminent
Ethereum saw a significant development last week after the United States Securities and Exchange Commission (SEC) approved spot Ethereum ETFs. The decision came following the approval of 19b-4 filings from major exchanges, including Cboe, NYSE, and Nasdaq. This step comes before the review of S-1 forms from various ETF issuers such as VanEck, BlackRock, and Fidelity. Once the S-1 forms are approved by the SEC, ETH ETF trading can begin. According to Will Cai, the head of indices at Kaiko, the approvals mean the SEC implicitly states that ETH without staking is a commodity.
“With these approvals, the SEC implicitly stated that ETH (without staking) is a commodity rather than a security. This isn’t just about access to ETH but has significant and likely positive ramifications on how all similar tokens will be regulated in the US with respect to trading, custody, transfer, etc. “[The approvals have] significant and likely positive ramifications on how all similar tokens will be regulated in the US.”
Some Selling Pressure Expected
Kaiko stated that it concluded that ETH could see a bull run by looking at what happened after spot Bitcoin ETFs were approved by the SEC. The firm stated that it expected some downward pressure on the price of ETH due to anticipated outflows. Kaiko pointed out Grayscale’s Ethereum Trust in particular, saying it could see outflows. This mirrors what happened when Bitcoin ETFs were approved, with investors who had put money into Grayscale’s GBTC immediately cashing out. This led to a drop in the value of Bitcoin in the short term.
“Once the ETH ETFs launch, it is reasonable to expect selling pressure on ETH from likely outflows or redemptions due to Grayscale’s ETHE, which has been trading at a discount between 6% and 26% over the past three months. Overall, even if inflows disappoint in the short term, the approval has important implications for ETH as an asset, removing some of the regulatory uncertainty that has weighed on ETH’s performance over the past year.”
Greg Magadini from blockchain data provider Amberdata agreed with the assessment, stating that there is definitely a “bull run here on this news” even as it remains uncertain when the Ethereum ETFs will begin trading. JPMorgan, America’s biggest bank, said on Friday it believes spot Ethereum ETFs will begin trading before November.
Sudden Approval
Spot Ethereum ETFs will give investors exposure to ETH via shares trading on the stock exchange. The SEC had initially been dragging its feet regarding approval, with analysts from Bloomberg and CoinShares speculating that ETH ETFs will not be approved. However, things suddenly changed last week after rumors began circulating that the SEC was indeed about to approve spot Ethereum ETFs. A few days later, the SEC approved spot Ethereum ETFs in a historic decision.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
