In the early morning of May 21, the market experienced a reversal. It was reported that the U.S. Securities and Exchange Commission had asked spot ETF applicants to submit revised 19b-4 filing documents. At the same time, Bloomberg analysts said: The probability of approval of the spot Ethereum ETF has increased from 25% to 75%. This positive news has injected a shot in the arm to the sluggish crypto market. The market was instantly boiling. Bitcoin broke through 71k, and Ethereum rose as much as 22%, briefly breaking through $3,800. The Altcoin market also ushered in a rare general rise.
According to Coinglass data, the total amount of liquidation in 24 hours reached $380 million, of which $294 million was liquidated in short positions. Among them, BTC’s 24-hour short positions were liquidated for $86.7008 million, and ETH’s 24-hour short positions were liquidated for $104 million. This is the largest liquidation since February 28.
On-chain data indicators
According to Nansen data, the Ethereum implied volatility curve has flattened, indicating that the market's expectations for future price fluctuations have decreased. In addition, the 25 Delta risk reversal hit a year-to-date high of more than 18%, indicating that investors tend to buy call options and are more confident in the rise in ETH prices.
Joseph Schrarizzi, founder of Stable Open Dollar, also pointed out on the evening of May 20: Ethereum’s market value increased by half of its competitor Solana in 3 minutes.
According to a report by Presto Research analysts, on May 24, traders bought a large number of $4,000 ETH call options, driving the price up. The current open interest in Ethereum options is worth $3 billion and will expire at the end of May and the end of June.
Meanwhile, call options (opened by optimistic traders who believe an asset’s price will rise) outnumber put options by almost 2:1.
VC says | Review of expectations for whether ETH ETF will be approved or not
Ethereum, as the #2 cryptocurrency in the crypto world, has a stable and strong user base and underlying ecological support. Its Layer2 and Restaking are both hot tracks closely related to it. Currently, companies such as Fidelity, BlackRock, VanEck, Bitwise, and Ark Invest are making final preparations.
Among them, Fidelity has submitted an amended S-1 application to the U.S. Securities and Exchange Commission (SEC) for its spot Ethereum exchange-traded fund (ETF).
Currently, the official website of the Depository Trust and Clearing Corporation (DTCC) of the United States has listed the VanEck spot Ethereum ETF "VANECK ETHEREUM TR SHS" (code ETHV), and the Create/Redeem column is displayed as N.
The DTCC website often lists securities that are eligible for trading and clearing within its system, including ETFs that have completed certain registration or compliance processes. However, this does not indicate that it will be approved by the SEC.
It is reported that Van Eck applied for Ethereum ETF spot in September 2023. Many other industry giants such as BlackRock, ARK Invest and Fidelity have followed suit. Among them, VanEck's application resolution deadline is May 23, and ARK Invest/21Shares' deadline is May 24.
According to LBank Market Watch, Bloomberg senior analyst Eric Balchunas posted on the X platform that rumors have it that the U.S. SEC hopes to submit a revised 19b-4 document for the spot Ethereum ETF before 10 a.m. local time tomorrow (based on a large number of comments received by relevant parties today), and it may be approved as early as Wednesday.
Geoff Kendrick, head of foreign exchange research and digital asset research at Standard Chartered Bank, said that if the Ethereum spot ETF is approved, it is expected that there will be inflows of 2.39 million to 9.15 million ETH in the first 12 months, which is equivalent to about US$15 billion to US$45 billion in US dollars.
Matt Hougan, a well-known bull and chief investment officer of Bitwise, said regarding the upcoming resolution of the spot Ethereum ETF: Whether the ETF is passed or not, new highs are bound to come.
Meanwhile, the market doesn’t seem too impressed with the rumor or the bullish sentiment, with Jeff Owens, co-founder of layer-1 blockchain Haven1, agreeing: “The unexpected movement in the price of ether suggests that there is a high risk that the SEC may approve a spot ETH ETF,”
ETH Price Analysis & Forecast
Judging from the current trend of ETH, ETH has broken out of the downward trend of the market and achieved an increase of up to 20%.
If the Ethereum spot ETF is approved, it may bring in billions of traditional funds. Imagine that the market value of ETH is about 28% of the market value of BTC, which means that 30% of the inflow of funds to BTC may have a 100% impact on ETH.
As of writing, ETH is trading at around $3,791, having gained 31.5% over the past seven days.
As the deadline approaches, the volatility of major cryptocurrencies has increased significantly. If the SEC rejects, a short-term ETH sell-off may occur. LBank reminds you to pay attention to trading risks and prevent major trading adjustments.
