The recent approval of spot Ether exchange-traded funds (ETFs) in the United States has not had a significant impact on the price of Ether, and there are a couple of possible explanations for this. On May 23, the U.S. Securities and Exchange Commission (SEC) gave the green light to eight spot Ether ETFs to be listed on their respective exchanges. Just before the news broke, the price of Ether (ETH) experienced a 3.4% drop, but it quickly recovered by around 5%. As of now, ETH is being traded at $3,806.
Zach Rynes, a crypto commentator, suggests that the lack of movement in the price of Ether can be attributed to the fact that “everyone who wanted to buy the approval already did.” Prior to this approval, Ether had already surged by 29% in the past week due to reports indicating a possible shift in the SEC’s stance on ETF approvals.
Rynes and others also point out that although the ETFs have been approved, they are yet to be launched. Launching the ETFs will require an approved S-1 filing, which is a comprehensive document containing details about the firm’s financials, risk profile, and the securities they plan to offer. VanEck has recently submitted its amended S-1 filing to the SEC, and experts predict that it may take several weeks to months for the S-1 approvals to be granted.
According to Rynes, the next major factor that could influence the price of Ether will be the inflow of capital once the ETFs start trading. He believes that “ETFs haven’t actually launched yet, so net new capital inflow is still to come.” Crypto research firm Second Mountain shares a similar sentiment, stating that a massive capital inflow can be expected in the first week of ETF trading, potentially reaching billions.
However, some believe that the ETF approval may not immediately lead to an upward trend in the price of Ether. For instance, when spot Bitcoin ETFs were approved for trading on January 10, the price of Bitcoin dropped by 15%. It took 30 days for the price to increase by 30% to $51,870, according to CoinMarketCap data.
There are also concerns about potential outflows resulting from Grayscale’s announcement of its plans to convert its Grayscale Ethereum Trust (ETHE) into a spot Ether ETF. Similar to what happened with Grayscale Bitcoin Trust (GBTC) after the approval of spot Bitcoin ETFs in January, significant outflows may occur. A pseudonymous crypto trader named Rho Rider warned about this possibility, stating that “Grayscale also re-filed the ETHE registration they’d withdrawn. Remember GBTC outflows? Now it’s $11B+ ETH that’s been trapped for 7 years.” Data from Farside shows that GBTC has lost a total of $17.6 billion in assets since spot Bitcoin ETFs started trading on January 11.
Despite the lack of significant movement in the price of Ether, some Ethereum enthusiasts argue that it is currently undervalued. Independent Ethereum educator Sassal stated that “ETH is stupidly undervalued” and suggested that the market has had only three days to factor in the ETF approval.
In terms of other cryptocurrencies, Bitcoin experienced a slight stumble of 1.2% to $67,362 following the announcement of the ETF approval, but it has since recovered to $67,706. Around the same time, Pepe (PEPE) reached a new all-time high of $0.00001531, representing a 5% increase within an hour after the approval news.
This article should not be regarded as investment advice or recommendations. It is important for readers to conduct their own research before making any investment or trading decisions.