Ethereum sees a 16% spike as Bloomberg analysts surprisingly increase approval odds to 75%

Ethereum ETFs may see approval as Bloomberg analysts increase their approval odds from 25% to 75%.
Grayscale CEO confirms resignation with only a few days left before SEC decides on spot Ethereum ETFs.
Ethereum may test key support levels if spot ETH ETFs are denied.

Ethereum's (ETH) price gained over 16% on Monday as Bloomberg analysts updated their odds for spot Ethereum ETF approval to 75%. Grayscale’s CEO stepping down from his role days before the Securities & Exchange Commission (SEC) decides on the ETFs has also added complexity to the predictions of analysts.

Daily digest market movers: Ethereum ETF approval now in limbo

Ethereum is expected to experience increased volatility this week as the market anticipates the SEC's response to spot Ethereum ETF applications. SEC must decide whether to approve or deny Van Eck's spot Ethereum ETF application on May 23 and the Ark 21Shares Ethereum ETF application on May 24.

In an interesting flip of position, Bloomberg analysts Eric Balchunas and James Seyffart have upped their odds for Ethereum ETF approval from 25% to 75%. According to Balchunas, the SEC “could be doing a 180” due to increasing political pressure.

Update: @JSeyff and I are increasing our odds of spot Ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue), so now everyone scrambling (like us everyone else assumed they'd be denied). See… https://t.co/gcxgYHz3om
— Eric Balchunas (@EricBalchunas) May 20, 2024

This comes after US presidential candidate Donald Trump made several pro-crypto statements in a campaign earlier in May. Many have speculated that President Joe Biden may make a pro-crypto move also to gain support from the crypto community.

Meanwhile, in an X post, Nate Geraci, President of the ETF Store, gave insight into the SEC approval process of ETFs and how it would affect the upcoming decisions. He stated that the SEC must approve both 19b-4s (exchange rule changes) and S-1s (registration statements) for an ETF to launch.

19b-4s is the filing that national exchanges like NASDAQ or the New York Stock Exchange (NYSE) submit to the SEC to seek approval for listing a new product on their trading platforms. In the context of ETFs, S-1s refer to the initial registration forms detailing how a fund would be managed and track the underlying asset's price.

Geraci says it's "technically possible for SEC to approve 19b-4s & then slow play S-1s," considering their reported lack of engagement.

However, Bloomberg analyst James Seyffart has said that if 19b-4s are approved, it would only be a matter of "when" not "if " before S-1s applications are approved. He also clarified their approval odds only apply to 19b-4s filings.

That said, if we're correct and we see these theoretical approvals later this week. It *should* mean that S-1 approvals are a matter of 'When' not 'If'...
— James Seyffart (@JSeyff) May 20, 2024

This follows a report from CoinDesk that exchanges have been asked to update their 19b-4s filings on an accelerated basis.

Also read: Ethereum drops below $3,000 again, spot ETH ETF sparks debate in crypto community

Meanwhile, Grayscale CEO Michael Sonnenshein has stepped down, according to a report from The Wall Street Journal. Peter Mintzberg, head of strategy for Goldman Sachs's asset and wealth management division, will take over as new CEO in August.

Sonnenshein also confirmed his departure from the digital asset management firm in an X post on Monday. This follows Grayscale's withdrawal of its application for a futures Ethereum ETF earlier in May.

I leave @Grayscale with deep gratitude for everyone who has been on this incredible rocket ship journey. @BarrySilbert, thank you for taking a bet on me and for your partnership these last 10 years. To the Grayscale Leadership Team - thank you for your dedication, loyalty, and…
— Sonnenshein (@Sonnenshein) May 20, 2024

With both events coming only a few days before the SEC decides on Ethereum ETF applications, many crypto community members earlier reduced their odds for an approval. But with the recent update from Bloomberg analysts, things may turn out positive for Ethereum.

ETH technical analysis: Ethereum may test key support levels

Ethereum is trading around $3,566 on Monday seeing more than a 16% increase on the day. With the SEC's decision on Van Eck's spot ETH application coming on Thursday, investors should watch out for high volatility.

The $3,029 support may prove key in the next few days before the event. A dip below the support indicates a high bearish sentiment from expectations that the SEC will deny the application. However, with recent price movement, ETH is aiming for the $3,730 resistance as expectations have switched bullish for spot Ethereum ETFs.

According to QCP, "Given the resounding lack of interest in the market, the risk is to the topside with a surprise approval catching everyone off guard, triggering a short squeeze taking us easily back to recent highs."

ETH/USDT 4-hour chart

A denial of spot ETH applications may trigger a wide dip following the fair value gap on Monday. However, ETH may not sustain any decline below the $2,914 to $2,852 range as it has shown strength in weathering dips within the past three months.

Ethereum development FAQs

What is the next big Ethereum software update?

After the Merge, the Ethereum community is looking at the Sharding upgrade next, which has been slated for sometime later in the year. The development can be summarized in four words, “scalability through more efficient data storage.” The software update will increase the capacity of the blockchain, widening the amount of data that can be stored or accessed. At the same time, all services running atop the Ethereum blockchain will enjoy significantly reduced transaction fees.

What is the difference between hard fork and soft fork?

A fork is the splitting of a blockchain after developers agree and proceed to implement upgrades. The decision comes after these developers reach a consensus for a software upgrade. The ensuing part will see one part continue with the status as is, while the other one will proceed with new features combined with the former ones. A hard fork basically entails permanent divergence of a new side chain from the original one, while a soft fork is doing the same, only difference being that it is temporary.

What is EIP-4844?

EIP-4844 is an improvement proposal for the Ethereum network. The upgrade promises reduced gas fees, which is a valuable offering considering the high transaction cost that continues to daunt crypto players. It has been a long-standing concern for the Ethereum network. The proposal is also referred to as “proto-Danksharding,” with an unmatched ability to increase the speed of transactions on the Ethereum blockchain. At the same time, it helps to reduce the transaction cost as everything becomes decentralized.

What is gas in the context of Ethereum?

Gas token is a new, innovative Ethereum contract where users can tokenize gas on the Ethereum network. This means they can store gas when it is cheap and start to deploy the gas once the market has shifted to the north. The use of Gas token helps to subsidize high gas prices on transactions, meaning investors can do everything from arbitraging decentralized exchanges to buying into initial coin offerings (ICOs) early.

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