Probability of Approval for Spot Ethereum ETFs in the US in May

• Following the tremendous demand for Spot Bitcoin ETFs, market analysts are hopeful that spot Ethereum ETFs will receive similar approval.
• Blofin notes that nearly 55% of ETH supply is held in 1,041 addresses, each containing more than 10,000 ETH, with retail traders holding less than 45%.
• The February increase in long-term skew is reported to be based on liquidity rotation rather than ETF news.

As the update for Ethereum price by Dencun approaches, community members are discussing the potential approval of spot Ethereum ETFs.

What Decision Will Be Made for Spot Ethereum ETFs?

Following the tremendous demand for Spot Bitcoin ETFs, market analysts are hopeful that spot Ethereum ETFs will receive similar approval. Leading industry players like BlackRock are making efforts to launch a spot Ether ETF, but optimism seems to have diminished amid general sentiments.

Analysis by Blofin indicates a significantly reduced probability of approval for spot ETH ETFs, citing factors such as adverse effects of the PoS mechanism, risks associated with price manipulation, and concerns related to collateral.

In its analysis, Blofin notes that nearly 55% (approximately 66 million coins) of ETH supply is held in 1,041 addresses, each containing more than 10,000 ETH, while retail traders hold less than 45%. These major holders can have a significant impact on ETH network upgrades due to their voting rights under PoS. The SEC has expressed concerns in its public statement, stating:

“…are there unique features about Ether and its ecosystem, particularly its proof of stake consensus mechanism, and the unique concerns associated with fraud and manipulation that are raised by a few individuals or entities having significant roles in Ether?”

In contrast, BTC holders do not have voting rights, and the distribution is more uniform, reducing the potential for price manipulation compared to ETH, given that whales hold approximately 40% of BTC supply, with around 2,100 whale addresses as of March 2024.

Ethereum Option Data Does Not Support

Possible clues have emerged in the options market. Following the announcement of the application for Spot BTC ETFs, there was a notable increase in both BTC and ETH long-term option trends, peaking in November 2023. However, the announcement of the application for spot ETH ETFs did not encourage option traders to incorporate an additional bullish sentiment factor.

The increase in long-term skew in February is reported to be based on liquidity rotation rather than ETF news. However, the report emphasizes that the final decision on the approval of spot ETH ETFs will not necessarily prevent a potential upward movement in ETH price.

In another development, BlackRock has appointed former GSR research analyst Matt Kunke as a digital asset product strategist. This move demonstrates BlackRock’s efforts to develop crypto ETF offerings for its clients.

As the ETH price once again surpasses the significant milestone of $4,000, the community is preparing for more gains as the Dencun update approaches.