Dimming Hopes for May Ethereum ETF Approval

Analysts from Bloomberg have notably adjusted their expectations, reducing the probability of a spot Ethereum ETF being greenlit by May to just 30%. This adjustment reflects a considerable shift from earlier optimistic projections, underscoring the intricate dance between regulatory processes and market anticipation.

At the outset of the year, Bloomberg Senior ETF Analyst Eric Balchunas posited a 70% chance of approval by May, a sentiment echoed, albeit at slightly lower odds, by his colleague James Seyffart, who estimated the likelihood at 60-65%.

However, the current sentiment appears markedly less hopeful. Seyffart’s recent comments on X, highlight a growing scepticism, punctuated by a notable lack of progress as the deadline looms. “This Ethereum ETF cycle feels like the opposite of Bitcoin ETF approval odds at the moment…We’re ~73 days from the deadline and there really seems to be little to no movement,” he remarked.

A pivotal meeting on March 8 between Coinbase, Grayscale, and the SEC regarding the potential conversion of Grayscale’s Ethereum Trust into an ETF initially seemed promising. Yet, the absence of subsequent commentary from the SEC has tempered expectations, as highlighted by Balchunas.

The backdrop to this evolving scenario includes a broader context of dampened expectations and a notable absence of the kind of filing changes that typically precede ETF approvals, as seen with Bitcoin ETFs. Crypto market-making firm GSR had initially pegged the chances of approval at 70%, a stance they are reconsidering in light of the current stagnation.

GSR’s research analyst Brian Rudick pointed to the procedural milestones that characterized the Bitcoin ETF approval process, which are conspicuously absent in the Ethereum ETF discourse. “Perhaps the SEC and issuers have the playbook from Bitcoin, truncating the process, but if we don’t start to see positive progress over the next month, we will lower our approval odds,” he commented, indicating a pivotal period ahead.

Echoing these concerns, Variant Fund’s Chief Legal Officer Jake Chervinsky maintained a cautious stance, suggesting that while a spot ETH ETF approval this year is not off the table, the prevailing political and strategic factors could significantly impede progress. Chervinsky’s outlook suggests that forthcoming weeks could provide clearer indications of the SEC’s inclinations, particularly as the May 23 deadline approaches.

Investment giants JPMorgan and TD Cowen have also weighed in, aligning with the consensus that a spot Ethereum ETF approval by May is unlikely. This collective scepticism amongst industry stalwarts reflects a broader theme of regulatory uncertainty impacting the tempo of cryptocurrency adoption within traditional investment vehicles.

As the May deadline for the Ethereum ETF approval approaches, the cryptocurrency community remains on tenterhooks. The shift from earlier optimism to cautious scepticism underscores the complex interplay between innovation, regulation, and market readiness. Whether this saga culminates in a breakthrough or a setback, it is a telling chapter in the ongoing narrative of cryptocurrency’s integration into mainstream finance.