Ethereum Spot ETF: Bloomberg Analyst Extends Launch Deadline

Bloomberg analyst Eric Balchunas has revised his projected timeline for the launch of Ethereum Spot ETFs in the United States. This adjustment follows recent comments from the US Securities and Exchange Commission (SEC) regarding the second round of S-1 form submissions.

Unfort think we gonna have to push back our over/under till after holiday. Sounds like SEC took extra time to get back to ppl this wk (altho again very light tweaks) and from what I hear next wk is dead bc holiday = July 8th the process resumes and soon after that they’ll launch… https://t.co/0ZQR7yiBLt — Eric Balchunas (@EricBalchunas) June 28, 2024

In May, the SEC abruptly approved the 19b-4 filings from eight prospective issuers of the Ethereum spot ETF, marking the first step towards these investment funds’ introduction. According to US regulations, the SEC must also approve the S-1 forms of these proposed ETFs before trading can begin. These forms detail an ETF’s investment objectives, strategies, risks, and fees.

Following the initial submission of all draft S-1 forms on May 31, the SEC responded quickly with comments described as "pretty light," instructing all issuers to submit the requested amendments within a week. Given the initial speed of the process, Eric Balchunas anticipated a swift approval of these forms, initially predicting a July 2 launch date for the Ether spot ETF. However, the SEC has since responded late on its second round of comments, though these were also described as "light tweaks."

Due to this delay and the upcoming US Thanksgiving holiday, which will significantly reduce available working days, Balchunas now forecasts that work on the S-1 forms will resume on July 8, with approval expected shortly thereafter. Unlike the 19b-4 forms, the S-1 forms do not have a fixed deadline, with approval dependent solely on the SEC’s satisfaction with the issuers’ proposed terms.

In early June, SEC Chairman Gary Gensler indicated that this process could "take some time," emphasizing that approval will largely depend on the applicants’ responsiveness to the Commission’s comments.

Meanwhile, investors and analysts remain optimistic about the potential performance of the Ethereum Spot ETFs once trading begins. In a recent X post on June 28, Charles Yu, Vice President of Research at Galaxy Research, predicted these funds would attract 20-50% of the demand seen in Bitcoin counterparts. With total Bitcoin Spot ETF inflows estimated at $15 billion, Yu forecasts the Ethereum ETFs could see $1 billion in monthly inflows for the first five months of trading.

Yu also expects Ethereum to exhibit higher price sensitivity to these inflows due to factors such as lower net inflation and a smaller supply percentage on exchanges.

This bullish outlook is shared by many in the financial community, who view the Ethereum Spot ETFs as a significant development in the cryptocurrency market. These funds are anticipated to provide more investment opportunities and potentially drive substantial capital inflows into the Ethereum ecosystem.

As the industry awaits the SEC's final decision, the approval of Ethereum Spot ETFs is seen as a pivotal moment. Successful approval and subsequent trading could further legitimize Ethereum as a major financial asset and open the door for additional crypto-related investment products. The continued interest and positive sentiment from analysts and investors alike underscore the growing importance of Ethereum in the broader financial landscape.

In summary, the path to the launch of Ethereum Spot ETFs has been marked by regulatory scrutiny and delays, but the potential benefits are substantial. With significant capital inflows predicted and the possibility of increased price sensitivity, these ETFs could play a crucial role in the future of Ethereum and the cryptocurrency market as a whole. As regulatory processes advance, the industry remains hopeful for a timely and favorable outcome from the SEC.

This development underscores the ongoing evolution of the cryptocurrency market and the importance of regulatory clarity and responsiveness. The eventual approval and launch of Ethereum Spot ETFs will be closely watched by market participants and could set the stage for further innovation and growth in the crypto investment space.