Ethereum Price Surges After Ark Invest and 21Shares Amend Spot ETF Application
Ethereum’s native token, ether (ETH), has experienced a significant surge in price following news of amendments to the joint spot Ethereum exchange-traded fund (ETF) application by Ark Invest and 21Shares. The price of ETH reached $2,457 before retracing to its current price of $2,424. This development comes on the heels of the successful deployment of the Dencun upgrade on the Holesky testnet, further bolstering the positive outlook for the Ethereum ecosystem.
Amendment Aligns Spot Ethereum ETF with Cash Creation and Redemption Model
The amended filing of the joint application by Ark Invest and 21Shares introduces a cash creation and redemption policy that mirrors the structure of recently approved spot Bitcoin ETFs. This adjustment aims to streamline the creation process, with authorized participants restricted to cash creations and redemptions, excluding in-kind transactions involving ETH. By aligning with regulatory expectations and operational efficiency, the amended filing reflects the SEC’s preference for cash-based methods seen in spot Bitcoin ETF approvals.
Uncertainty Remains Over Introduction of ETH Staking in Amended Filing
While the amended filing introduces the possibility of Ethereum staking, allowing for the staking of ether tokens from the Trust’s Cold Vault Balance, the inclusion of this feature in the final proposal remains uncertain pending regulatory approval. Staking could potentially generate rewards, treated as income, but it also carries a risk of loss. The filing indicates some ambiguity with bracketed sections which suggests that the SEC may not permit staking in spot Ethereum ETFs. Bloomberg ETF analyst James Seyffart remains cautious about the inclusion of staking, highlighting the regulator’s potential stance against it.
Mixed Reactions and Varying Expectations Surround the Amended ETF Application
The news of Ark Invest and 21Shares amending their spot Ethereum ETF application has evoked mixed reactions among investors and industry observers. While it is considered a positive development for spot Ethereum ETFs, expectations for approval differ. Polymarket reports 43% odds of a May approval by the SEC, while Seyffart suggests a 60% chance. Standard Chartered Bank is optimistic about an approval in May, while TD Cowen is more skeptical, expecting no approval until 2024.
Ethereum Price Surge Indicates Investor Optimism and Market Interest
Despite the uncertainty surrounding regulatory approval, the surge in Ethereum’s price signals investor optimism and interest in the potential launch of a spot Ethereum ETF. Stakeholders are eagerly awaiting further developments in the ETH ETF space, closely monitoring regulatory decisions and industry dynamics. The SEC’s deadline for a decision on a spot Ethereum ETF is approaching on May 23, and analysts are closely watching for any indications on the outcome.
Analyst comment
Positive news
As an analyst, the surge in Ethereum’s price indicates strong investor optimism and market interest in the potential launch of a spot Ethereum ETF. The amended filing aligns with regulatory expectations and improves operational efficiency, increasing the chances of approval. However, uncertainty remains regarding the inclusion of staking. The market will closely monitor regulatory decisions, with expectations ranging from a May approval to no approval until 2024. The market is eagerly awaiting further developments, and the SEC’s decision on May 23 will likely have a significant impact.
