ETH surged 20% overnight. Did the US SEC make a 180-degree reversal on the spot Ethereum ETF?

The crypto market once again witnessed an “overnight bull run”.

After the US SEC postponed the Ethereum ETF decision several times, May 23 to 30, 2024 is expected to be the final deadline for several spot Ethereum ETFs to wait for approval from the US SEC.

If the US SEC does not approve the spot Ethereum ETF this time, the next time will be one month later on June 23.

Moreover, VanEck, ARK, and Hashdex will need to resubmit their applications for spot Ethereum ETFs.

But a major reversal occurred on May 20, 2024.

According to CoinDesk, people familiar with the matter revealed that the U.S. SEC asked stock exchanges to update the 19b-4 filing documents for Ethereum spot ETFs on Monday. The 19b-4 filing document is a form used to notify the SEC of rule changes that allow funds to be traded on exchanges.

That suggests they could approve the applications before a key deadline this Thursday (May 23). But that doesn’t mean the ETF will be approved. Potential issuers also need to get their S-1 filings approved before the products can start trading. One person familiar with the matter said the SEC could take indefinitely to approve an S-1 filing because it has no deadline.

Meanwhile, Bloomberg Intelligence ETF analyst Eric Balchunas said the odds of a spot ether ETF approval increased to 75% (up from 25%), and this afternoon heard talk that the SEC might do a 180 on this (increasingly political issues). Balchunas said the increasing politicization of cryptocurrencies is the driving factor behind this sudden shift.

One company in talks with the SEC said it felt it was dragging its feet a few weeks ago but now feels it may be on the right track to approval, according to a person familiar with the matter.

Influenced by this news, the price of Ethereum recovered overnight after being sluggish for many days, and soared to above US$3,700 at one point, with a 24-hour increase of more than 20%.

The same is true for the ETH/BTC exchange rate. A few days ago, ETH/BTC fell below 0.045, causing the community to question ETH's performance in this bull market.

Stimulated by the surge in Ethereum, the Ethereum ecosystem-related tokens also generally surged. The low circulation/high FDV VC token narrative that the crypto community was still paying attention to yesterday is no longer of interest.

Before the rumor that the US SEC had changed its attitude towards the spot Ethereum ETF by 180 degrees, some analysts said that the possibility of the spot Ethereum ETF being approved by the US SEC was underestimated. Coinbase institutional research analyst David Han said in a report on May 15 that the possibility of the SEC approving the spot Ethereum ETF by the end of May was between 30% and 40%. Although the market generally believes that the US authorities will not approve it in the short term, the possibility of the Ethereum spot ETF being approved is still underestimated.

Crypto institutions have also expressed their views on the U.S. SEC's change in attitude towards spot Ethereum ETFs.

Alex Thorn, head of research at Galaxy Digital, said that if speculation about the US SEC's 180-degree turn on the Ethereum ETF is true, they may find a balance between ETH itself being not a security and staking ETH being a security.

Variant Fund Chief Legal Officer Jake Chervinsky wrote that if the spot Ethereum ETF is approved, everyone I know in Washington who is close to the process will be shocked. This means that after the SAB 121 vote, approval may mark a major shift in U.S. cryptocurrency policy, perhaps more important than the ETF itself.