This is HODL FM. A Web3 publication for emerging trends, topics, and comprehensive on-chain analysis.  

Here is what we have for you today:

  • Newest and historic news for Ethereum;
  • Odds surged from 25% to 75% before ETF approval;
  • The possibility of spot Ethereum  Outflows looms in the near dark with makers.

Related: SEC Approves Ether ETFs: Exploring the Pitfalls

Anyone who wanted to buy the approval of Ethereum ETFs may have already done it when the odds shifted from 25% to 75%. This is one reason why Ethereum lacked upward momentum even after the United States Securities and Exchanges Commission approved listing the first Ethereum ETF product today.

Source: Tenor

When rumors surfaced that the SEC had changed its position about an Ethereum ETF early last week, ETH’s price went up by 29%. This indicates every buy signal delivered by the news influenced a purchase decision, and the price would only rise past its present level once the approved Ether ETFs were cleared for launch; something that has not already happened. 

7-Day Ethereum price chart. Source: CoinMarketCap

Getting Clearance for the S-1 Filing

For the SEC to clear them, they will need to provide crucial financial details and risk profile assessment on the S-1 filing. VanEck, the first ethereum ETF application to be approved by the SEC, said it has already sent its S-1 filing and was waiting for approval. However, sources close to the matter claim an S-1 filing could take weeks or even months to get clearance.

Cryptocurrency pundit Zach Rynes argued that Ethereum’s lack of movement after the approval indicates everyone who saw the buy signal last week acted on it.  Now, the next phase for Ethereum is the injection of Ether ETF inflows. 

Once they start trading, the net inflow could potentially reach billions of dollars and drive Ethereum to All-Time-Highs. If you are worried that the price is not acting as expected, this is the time to fill bags. With Bitcoin, it took almost 30 days for the price to get a 30% spike, even after the approval of the spot Bitcoin ETF on 10th January 2024.

Worst-case Scenario

On the contrary, pessimists say there could be massive outflows if Grayscale converts its Grayscale Ethereum Trust (ETHE) into a spot Ethereum ETF, as it announced a few days ago.

Aside from that, bulls believe that Ethereum is largely undervalued. Sassal, an Ethereum ecosystem tutor, agrees with this notion, arguing that the market only had less than three days to price in the ETF approval.

Before the approvals, issuance applicants had to amend their ETF filings to exclude staking provisions and align with the SEC’s compliance requirements. Staking has remained an important feature of Ethereum’s proof-of-stake (PoS) consensus mechanism after the network switched from proof-of-work. However, the SEC considers staking offerings as constituting the selling of unregistered securities offerings. 

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These considerations have resulted in legal actions against major cryptocurrency exchanges like Kraken and Coinbase that have violated federal laws by providing staking services. As such, investment firms applying for the Ethereum ETF had to remove staking features on their proposals to avoid being on the wrong side of the SEC’s side.

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