Ethereum Spot ETFs Finally Approved by US SEC: A New Era for Institutional Investing

Ibrahim Ajibade
Updated: May 23, 2024, 21:52 GMT+00:00

Key Points:

  • The U.S. Securities and Exchange Commission (SEC) has approved the first Ethereum Exchange-Traded Funds (ETFs) on May 23, 2024.
  • ETH spot ETF approval marks a significant milestone for the cryptocurrency industry which has faced intense global regulatory scrutiny in recent years.
  • According to market data, Bitcoin ETFs have already pulled in over $58 billion in inflows within 5 months post-launch.
Ethereum (ETH) price forecast

In this article:

Ethereum ETF Approval Marks New Era for Institutional Investing

In a landmark decision on May 23, 2024, the U.S. Securities and Exchange Commission (SEC) has approved the first Ethereum Exchange-Traded Funds (ETFs). This marking a significant milestone approval comes 5 months after spot Bitcoin (BTC) ETF approvals, signaling increasing global regulatory acceptance of digital assets.

Anticipated Market Impact and Institutional Adoption

According to analysts, the approval of Ethereum ETFs is poised to significantly boost Ethereum’s market position.

The increased accessibility and regulatory clarity provided by these ETFs are likely to attract a broad range of institutional investors who have previously been cautious about entering the crypto market due to regulatory uncertainties.

The SEC’s approval now opens the door for asset managers like VanEck, Blackrock and Ark 21Shares to launch their Ethereum ETFs, potentially driving a substantial wave of institutional investment into the second-largest crypto asset by market capitalization.

This move is expected to enhance liquidity and provide a regulator-approved pipeline for ETH to attract investment from mainstream tradfi corporate entities like Hedge funds, Family offices, Pension fund managers etc.

How Will Ethereum Price React to ETF Approval?

Standard Chartered Bank, in a recent report, suggested that Ethereum’s price could rise to $4,000 following the ETF approval, reflecting similar bullish trends observed with Bitcoin ETFs.

Bitcoin ETFs Pull in $58.9 Billion BTC Holdings | Jan - May 2024 | Source| TheBlock
Bitcoin ETFs hit $58.9 Billion in BTC Holdings | Jan – May 2024 | Source| TheBlock

This optimism growing around Ethereum ETH price action is grounded in the data reference to over $58 billion inflows recorded by 10-newly launched Bitcoin ETFs within 5-months post-launch,.

Unsurprising, BTC price skyrocketed to a new all-time high above $72,000 in March 2024, just 3 months after the Bitcoin Spot ETF approval in January 2024.

If Ethereum ETFs follow on the same trajectory, billions in institutional inflows, backed up by bullish speculative swing traders, could rapidly drive ETH price to new all time-highs above, $4,000.

More so, technological upgrades, such as the implementation of roll-up technology and Ethereum Improvement Proposal (EIP) 4844, are set to enhance the network’s scalability and efficiency, further strengthening its appeal to institutional investors.

Since, Bloomberg analysts reported the SEC’s imminent approval on Monday May 20, Ethereum price has skyrocketed by 25% adding over $90 billion to its market capitalization in the process.

 Ethereum (ETH) Price Action ahead of ETF Approval
Ethereum (ETH) Price Action ahead of ETF Approval

In summary, the SEC’s approval of Ethereum ETFs marks a significant step forward for the cryptocurrency market, potentially driving institutional adoption and enhancing market liquidity.

But more importantly, it eases the regulatory scrutiny and eases investor skepticism, which are key factors that have significantly slowed down the the global growth of the cryptocurrency sector in recent years.


About the Author

Ibrahim Ajibade Ademolawa is a seasoned research analyst with a background in Commercial Banking and Web3 startups, specializing in DeFi and TradFi analysis. He holds a B.A. in Economics and is pursuing an MSc in Blockchain.

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