24 May 2024

What a U-turn! The US SEC has all but approved the Ethereum spot ETFs today after having strong reservations about it. It may be because of political pressure given the upcoming US elections or a simple change of heart – all we care about is that this is the biggest positive development for crypto in 2024 - even bigger than the approval of Bitcoin spot ETFs in January. Why?, you would ask. Well, we cover that in the Hot Take today.

Meanwhile, we spotted someone doing this in the US SEC office

Before that, lets dive into the top-3 stories and macros of the week.

Top-3 stories of the week:

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2

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The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $2.54 trillion - UP 7.2%

• Bitcoin price - $67,659 - UP 2.1%

• The dollar index (DXY) - 105.09 - UP 0.5%

• Bitcoin Dominance - 53.87% -  DOWN 3.5%

• Crypto Fear and Greed Index - 74 - Market is in Greedy State

THE HOT TAKE

Ethereum’s time to shine

After months of underperformance against Bitcoin, Ethereum has finally found its mojo. With a 29% weekly gain, ETH is now trading above $3,800. Let us dive into how it all unfolded this week and what exactly does this mean for us, the investors.

The Ethereum spot ETF saga

Early this week, after weeks of speculation suggesting ETH ETFs may be rejected, things took a surprising turn. Bloomberg analysts Eric Balchunas and James Seyffart reported a major shift in the US SEC's stance, increasing the chances of approving an Ethereum Spot ETF from 25% to 75%.

On May 20, ETH jumped from $3,047 to $3,694, skyrocketing 21% in just one day. This is the single largest daily candle in ETH's history.

This new optimism came from key developments, including the US SEC asking exchanges to update important documents, suggesting approval could be close. This news sparked a 20% jump in Ethereum's price, showing the market's excitement about the potential approval. CoinDesk added that the SEC had sped up the process for updating Form 19b-4, an essential document for listing and trading spot Ether ETFs.

What led to this change in stance?

There are several macro factors that led to this unexpected change.

• Shift in regulatory stance: The SEC's past actions against Ethereum-related groups, like its foundation and ConsenSys, seemed pretty tough. But now, the SEC asking for updated documents hints they might be easing up.

• Political Developments: This week, the US House of Representatives passed the Financial Innovation and Technology for the 21st Century Act (FIT21) with support from both parties, taking a big step towards clear crypto regulations. This bill aims to create a comprehensive set of rules for digital assets, clarify the roles of the SEC and CFTC, and set guidelines for the crypto market. Even though the White House opposes the bill, President Biden hasn't threatened to veto it.

Early jitters before the approval

ETH experienced a significant price action early Thursday, climbing to its highest level since mid-March, peaking above $3,900. However, it soon faced a sharp pullback, dropping to around $3,700, though it managed to stay in the green over the past 24 hours.

This price action can be attributed to a substantial sell order from trading firm Symbolic Capital Partner as a potential catalyst for the dip. On-chain data indicated that the firm offloaded 6,968 ETH, valued at $27.4 million, in a single minute, likely contributing to the sudden price volatility.

Today, Ethereum ETFs are approved.

All 8 applications have been approved today. This approval of 19b-4 filings doesn’t mean that these ETFs start trading immediately. Approval of S-1 documents are still pending, they can take 1-2 months given how Bitcoin ETFs played out. But, we now know that Ethereum spot ETFs are coming to the US market and will begin trading sometime this year.

What does this mean for us investors?

Ethereum spot ETFs are a big deal for the crypto industry – Governments have now recognised the validity of not only Bitcoin but also other crypto assets in the ecosystem. According to Coinbase’s legal executive, this essentially means that Ethereum is being treated as a commodity just like Bitcoin. If Ethereum ETFs can be approved, so can Solana’s and even Dogecoin’s. It opens up millions of possibilities, 99% of them leading to wider acceptance and adoption of the crypto asset class. This move could also bring more regulatory clarity and better investor protection, aligning with the SEC's goals.

For Ethereum, in particular, this approval could boost its market position. With access to the same capital pools as Bitcoin, Ethereum could grow significantly, thanks to higher demand and increased market confidence. It will confirm Ethereum’s position as a blue chip crypto in line with Bitcoin.

Already, Ethereum has outshone Bitcoin this week after months of decline.

The funding rate for ETH perpetual contracts (perps) went up from -0.02% on Saturday to 0.03% by Tuesday. Open interest in ETH perpetual contracts (perps) surged to a record high of over $11.4 billion as Ethereum's price jumped to over $3,800. This means more money is being put into ETH futures contracts than ever before.

All of this points to a strong 2024 performance for Ethereum. A price rally towards $5,000 can be anticipated in the upcoming months if ETFs begin trading and money flows in.

We have buckled up and are ready for the ride. Have you gotten your bags filled yet?

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.Ethereum ETF approval is the best news of 2024 🚀