The cryptocurrency market witnessed a substantial surge on Monday, driven by rising speculation that Ether exchange-traded funds (ETFs) may soon receive regulatory approval from the U.S. Securities and Exchange Commission (SEC). This move has bolstered the prices of major cryptocurrencies, significantly impacting investor sentiment.
Ether, the second-largest cryptocurrency by market capitalization, skyrocketed to $3,650 early Tuesday, marking a 17.5% increase over the past 24 hours. Bitcoin, the world's most valuable cryptocurrency, briefly surpassed the $71,000 threshold before settling around $70,880, representing a 6.1% increase from the previous day. Other notable cryptocurrencies also saw gains, with Dogecoin and Binance's BNB rising by 8.5% and 7%, respectively.
The surge in crypto prices is closely linked to speculation regarding the SEC's potential approval of Ether ETFs. According to reports, the SEC has requested exchanges seeking to list Ether ETFs to update or refile their Form 19b-4 regulatory documents. These filings are typically made to request the SEC to amend its rules to allow a new type of ETF. CoinDesk reported that the SEC sought these filings on an "accelerated basis," suggesting that approvals could be imminent, potentially as early as Thursday.
Adding to the optimism, Bloomberg analysts James Seyffart and Eric Balchunas raised their odds of a spot Ether ETF approval to 75%, up from an earlier estimate of 25%. Balchunas noted on X, formerly known as Twitter, that there was "chatter this afternoon the SEC could be doing a 180 on this (increasingly political issue)."
The potential approval of Ether ETFs could have significant implications for the cryptocurrency market. Since the start of this year, Bitcoin's value has increased by 61%, largely driven by the SEC's approval of spot Bitcoin ETFs. A similar approval for Ether ETFs is expected to attract substantial institutional capital, further driving up the value of the cryptocurrency.
However, there have been notable concessions made by Ethereum ETF applicants to address SEC concerns. Several asset managers have amended their filings to remove language related to staking, a process where users delegate Ethereum tokens to the network in exchange for rewards. This shift followed the SEC's scrutiny of staking services, which it has previously argued could constitute securities offerings.
Fidelity, one of the asset managers, removed staking language from its proposed ETF in an amended filing on Tuesday. This move mirrors a similar adjustment made by Ark Invest/21 Shares earlier this month. Mark Connors, Head of Research at 3iQ, described the removal of staking language as a "temporary concession" to appease the SEC.
Despite the regulatory challenges, the potential approval of spot Ether ETFs could significantly impact the market. As of now, about 27% of Ethereum's supply, or 32 million ETH, is staked, according to a Dune dashboard. The approval of Ether ETFs could lead to a significant portion of Ethereum's supply being held in approved funds, affecting the overall market dynamics.
The SEC's evolving stance on cryptocurrency regulation reflects broader political pressures. Last week, lawmakers voted to erase SAB 121, a crypto-custody rule, indicating growing political influence over the SEC's regulatory approach. Connors noted that the SEC's "regulation by enforcement method is clearly under assault," suggesting that political pressure may be influencing the agency's decisions.
