What you need to know
The U.S. Securities and Exchange Commission’s (SEC) approval of spot Bitcoin (BTC-USD) earlier this year was a watershed moment for the cryptocurrency community. So what about the second most popular cryptocurrency? When will the SEC approve a spot Ethereum (ETH-USD) ETF?
This is the billion-dollar question as Ethereum bulls eagerly await a potential SEC ruling that could soon enable significant capital inflows into the cryptocurrency space. With ether prices soaring and trading volume skyrocketing, something is definitely happening.
As a result, many investors may be wondering if a bullish catalyst is around the corner.
Why did Ethereum rise 23%?
Financial markets in the 2020s are very efficient. This includes cryptocurrency markets that trade 24 hours a day, 7 days a week.
When news spreads, it spreads quickly and the market reacts immediately. Markets are also forward-looking, with financial traders trying to anticipate news events even if they are still in the rumor/speculation stage.
This phenomenon may be magnified by cryptocurrency. This is because overnight trading allows news items to spread overnight without any disruption to trading. All of these factors caused the price of Bitcoin to rise above $71,000 on Monday night and Tuesday morning before falling slightly.
However, Bitcoin was not the star of the show as Ethereum’s 23% rally dwarfed Bitcoin’s 5-8% price swing. This was Ethereum’s biggest 24-hour price move, with Ethereum reaching $3,800 on unusually high trading volume.
As you may have guessed by now, the price action is tied to the possible SEC approval of one or more long-awaited spot Ethereum ETFs. However, since the SEC has not made a final decision on a spot Ethereum ETF (as of this writing), it is now calling for a “complete decision.”
Additionally, the SEC has set a May 23rd deadline for a final decision on VanEck’s application for a spot Ethereum ETF. If the SEC rejects a company’s application, it won’t be the end of the world, but approval will likely set a precedent and open the door to more approvals.
On the other hand, if there is no final decision from the SEC yet, why would the market panic buy Ether in advance?
Again, this is because the cryptocurrency market is so efficient and forward-looking that just a hint or rumor can trigger massive price movements.
In this case, the main catalyst was a post on X by Bloomberg senior ETF analyst Eric Balchunas.
There is a lot to unpack here. According to the
Around the same time as Balchunas’
As you can imagine, this report added fuel to the burning fire of speculation and sparked a rise in the price of Ethereum.
Precautions for aspiring Ethereum millionaires
At this point, it may be tempting to take out a loan against your home and go all in on ether. However, I definitely do not recommend this method, and while it is okay to speculate on small ether positions, there is a major caveat to note.
The aforementioned CoinDesk report warned that the SEC would not necessarily approve a spot Ethereum ETF.
“Prospective issuers must also have their S-1 applications approved before their products can be traded,” CoinDesk said.
Moreover, the SEC “could take indefinite time to approve the S-1 document,” CoinDesk added.
To be honest, everything about this news article sounds “unclear” and speculative.
For example, CoinDesk wrote: “One company in discussions with the SEC said it appeared to be on the right track for approval. A few weeks ago it felt like the SEC was dragging its feet, but that has changed. problem.”
Making large Ethereum trades based on “sentiment” (quoting CoinDesk) and “chatter” (quoting Balchunas’s X post) is not necessarily a wise choice for serious investors. Again, if you choose to invest, it is wise to keep any positions small.
Lastly, it is worth considering that after the 23% rally, the market may have already priced the best-case scenario for Ethereum. Investors would do well to keep this in mind before pursuing their dreams of fast cryptocurrency trading and becoming an Ethereum millionaire.
