Ethereum ETF issuers "work overnight", market sentiment remains high

Optimism continues to grow, with the U.S. Securities and Exchange Commission ( SEC )'s about-face on potential approval of a spot Ethereum ETF exciting crypto investors and driving the market to continue its rally.

According to Barron's, citing sources, SEC staff told exchanges on Monday that they were inclined to approve the products and said that if the "outstanding issues" of the ETF application were resolved in a timely manner, approval could come as early as this week.

Reuters also reported that the SEC has asked Nasdaq, the Chicago Board Options Exchange (CBOE) and the New York Stock Exchange (NYSE) to update and revise existing application documents before the upcoming deadline.

At press time, Bitcoin is trading at $69,750, up 0.56% in the past 24 hours, while ETH is trading at $3,740, up 8.9% in the past 24 hours.

Stocks also moved higher on Tuesday, with the Nasdaq and S&P 500 hitting all-time highs. By the close, the S&P, Dow and Nasdaq were all up, rising 0.25%, 0.17% and 0.22%, respectively.

Altcoins were boosted by positive developments in Ethereum, with the top 200 tokens by market cap rising across the board on Tuesday . Ethereum Name Service ( ENS ) was the best performer, up 29.3%, followed by SKALE (SKL) up 20.4%, and Metis (METIS) up 16%. Reserve Rights (RSR) fell the most, down 9.8%, Arweave (AR) down 9.3%, and Raydium (RAY) down 7.7%.

The overall cryptocurrency market cap is currently $2.57 trillion, with Bitcoin’s dominance rate at 53.1%.

Issuers rush to revise proposals, but opinions differ within the SEC

The deadlines for the first round of spot Ethereum ETFs are approaching, with VanEck ’s deadline being May 23 and Ark Invest / 21Shares ’ deadline being May 24.

As of press time, at least five spot Ethereum ETF issuers, including Fidelity, Invesco /Galaxy, Ark/21Shares, and Franklin Clinton, have submitted revised 19b-4 documents.

Grayscale dropped its staking proposal in its proposed spot Ethereum ETF conversion application, according to an amended preliminary proxy statement, and other issuers have also removed staking provisions from their spot Ethereum ETF applications. Earlier on Tuesday, Fidelity withdrew the possibility of staking rewards from its S-1 registration statement.

James Seyffart, an ETF analyst at Bloomberg, said Grayscale’s move was expected. “It looks like Grayscale is removing the collateral language in its filing to convert ETHE into an ETF. (This was/is expected),” Seyffart said in a post on X.

Bloomberg analyst James Seyffart said on the X platform: "There is still a long way to go before the launch. But these documents prove that all the rumors, speculation and predictions are accurate. We still need to actually see all the 19b-4 SEC approval orders, and then we need to see the S-1 approval. It may take weeks or longer before the ETF is launched."

According to The Block, citing sources, the SEC's Trading and Markets Division previously notified exchanges that they would approve 19b-4 this week. Issuers responsible for S-1 contacted the SEC, but reviewers from the SEC's Corporate Finance Division seemed to disagree with the agency's Trading and Markets Division.

Notably, the SEC’s Division of Trading and Markets is responsible for reviewing 19b-4s, while the agency’s Division of Corporation Finance is responsible for S-1s.

“They haven’t even coordinated it internally yet, which is why this is likely a political decision,” said one person familiar with the matter, who said they would not be surprised if it became a campaign issue.

“The SEC is doing the equivalent of writing a term paper the night before the deadline,” the source said of the agency’s work to withdraw its 19b-4s comments.

Analysts optimistically predict that Bitcoin will hit a new all-time high by the weekend

Geoff Kendrick, head of foreign exchange research and digital asset research at Standard Chartered Bank, said in a report that the approval of an Ethereum spot exchange-traded fund (ETF) this week will further legitimize the cryptocurrency industry and is therefore also positive for Bitcoin.

“I expect Bitcoin to set a new all-time high by the weekend, surpassing the March 14th level of $73,798,” he said.

Kendrick added that the newfound optimism surrounding the potential approval of an Ethereum spot ETF this week gives him more confidence in his Bitcoin price targets of $150,000 by the end of 2024 and $200,000 by the end of 2025.

Market analyst Bloodgood said: "Recently, it's hard to have a week without shameless attacks on cryptocurrencies from Gensler, Warren, etc. The SEC unexpectedly asked for accelerated update documents, which they would not have done if they had already decided to reject them this week. Therefore, the probability of approval has risen sharply, so this is definitely the most noteworthy headline this week."

As for Bitcoin, Bloodgood noted that after setting a local low in early May, the uptrend continued, with BTC securing two notable resistance breakouts following last week’s lower-than-expected CPI data.

Bloodgood outlined three possible scenarios for the future:

(1) False breakout: It is necessary to observe whether this breakout will continue, because if it turns out to be a false breakout, it is expected that the local low will be re-touched;

(2) Range: If bulls manage to defend the $69,000 level and Bitcoin fluctuates between this level and the current ATH, altcoins will have a chance;

(3) ATH Breakout: If the bulls succeed in breaking through the ATH level, we will see more funds flowing into Bitcoin and altcoins will slowly follow suit, possibly approaching $80,000.

"All three options are possible, and only time and charts will tell which one will work," he said.