Anticipation Builds as Ether ETF Decision Looms: Experts Warn of Market Volatility
Summary:
As the U.S. SEC's decision on Ether exchange-traded funds (ETFs) approaches, crypto industry experts warn of potential volatility. While Ether's recent 20% surge took many by surprise, investing experts advise caution as the SEC's decision on the ETFs could go either way, potentially leading to a market correction. Should approval be granted, a broad sector altcoin rally is expected, due to many altcoins operating on the Ethereum Virtual Machine. With multiple Ether ETFs awaiting approval in the U.S, anticipation is building, despite risks of a significant price contraction in case of SEC rejection.
Anticipation is mounting as the U.S. Securities and Exchange Commission's (SEC) decision on Ether exchange-traded funds (ETFs) is fast approaching. In an interview with Cointelegraph, Lucas Kiely, the primary investment strategist at the digital asset management service Yield App, noted that while the sudden 20% surge in Ether's value this week did catch many off guard, it's imperative for investors to be cautious and thoroughly evaluate their decisions moving forward. As he pointed out, the SEC is yet to rule on Ether spot ETFs and the outcome is far from certain. He also suggested that even with a positive outcome, a short-term market correction, similar to what was observed with Bitcoin spot ETFs, could be on the horizon.
Jeff Owens, the co-creator of Haven1, a primary blockchain technology platform, echoed these sentiments. He highlighted that Ether's unpredictable price shift is reflective of how much is riding on the SEC's decision to greenlight a spot Ether ETF. Owens anticipates that approval could spur a wide-scale rally in the altcoin market, a large fraction of which operate on the Ethereum Virtual Machine. He referred to the ripple effects already observed in the price trends of numerous altcoins, particularly layer-2 solutions like Arbitrum and Optimism, as well as decentralized finance platforms such as Uniswap and Aave.
Some commentators have even more bullish projections. Geoffrey Kendrick, who heads the foreign exchange research division at Standard Chartered Bank, estimates potential inflows ranging from "$15 billion to $45 billion" if the Ether spot ETFs get the thumbs up. He contended that once investors recognize Ethereum as the digital equivalent of big tech, they are likely to embrace it more wholeheartedly.
Multiple Ether ETFs are currently awaiting approval in the United States. The final decision on VanEck's ETF proposal is slated for May 23, while ARK Invest and 21Shares will hear the SEC's verdict a day later. Notably, Eric Balchunas, a senior ETF analyst at Bloomberg, recently increased the likelihood of an approval from 25% to 75%, attributing this adjustment to mounting political pressure on regulatory bodies. Betting markets, at present, show a 61% chance of endorsement.
However, as the key date approaches, there has been a noticeable surge in the price dynamics of leading digital currencies. In his concluding statement, Owens cautioned investors to anticipate a considerable price contraction in case of an SEC rebuff, and a short-term "sell the news" event even if these ETFs are authorized.
Published At
5/21/2024 6:30:28 PM
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