Coinbase Confident Spot Ether ETFs Could Hit The Market Sooner Than We Thought

Ethereum’s Big Moment: After BlackRock, Fidelity Seeks SEC Greenlight For Spot Ether ETF

Despite industry pessimism, spot (ETH) exchange-traded funds (ETFs) that give investors access to Ethereum’s ether (ETH) could be approved sooner rather than later, according to Coinbase, the largest crypto exchange in the United States.

Spot Ether ETFs Only A Matter Of Time

Expectations that the U.S. Securities and Exchange Commission (SEC) will give its regulatory blessing to spot ether ETFs this month have declined significantly amid the agency’s radio silence with potential issuers.

However, despite the broad consensus that an ETH ETF is unlikely to be approved soon, Coinbase analysts believe the market may underestimate the chances of potential approval.

In a Thursday research report, America’s biggest cryptocurrency exchange stated that “while there is uncertainty around a timely approval given the SEC’s apparent silence with issuers,” it’s only a matter of time before such an investment vehicle goes live.

There’s a slew of investment titans — including BlackRock, Fidelity, and Franklin Templeton — who have submitted applications with the SEC to introduce an Ether exchange-traded fund. However, the SEC has continually postponed decision deadlines for the filings. Moreover, prospective fund issuers are bracing for denials as their private discussions with the regulator have not been as productive as they had been before the January approval of spot Bitcoin ETFs.

But as crypto increasingly becomes a major U.S. election issue, and with possible litigation on the horizon in the event of rejections, Coinbase’s institutional research analyst David Han believes the odds of a greenlight are around 30%-40%.

It’s worth mentioning that Coinbase previously met with the SEC to address concerns about the conversion of Grayscale’s Ethereum Trust into a spot ETF, as ZyCrypto reported.

ETH Price May Surprise To The Upside In Coming Months

The Ethereum price has underperformed many of its top peers year-to-date, rising by circa 32% in 2024 compared to Bitcoin’s 56% price growth and Solana’s 65%. However, Coinbase remains bullish on the longer-term prospects of the second-largest cryptocurrency by market cap.

“Ether may have the potential to surprise to the upside in the coming months,” Han posited, arguing that ETH does not have “major sources of supply-side overhangs” like token unlocks or miners’ selling pressure.

“To the contrary, both staking and layer 2 growth have proven to be meaningful and growing sinks of ETH Liquidity,” the Coinbase strategist added. “ETH’s position as the center of decentralized finance (DeFi) is also unlikely to be displaced in our view due to the widespread adoption of the Ethereum Virtual Machine (EVM) and its layer 2 innovations.”

In conclusion, Han says Ether has the potential to outperform in the second half of 2024 despite being an underperformer year-to-date. 

CoinGecko data shows that ETH is up by nearly 4.8% in the last 24 hours. Over seven days, the market’s largest altcoin has risen by roughly 7%. It’s now priced at $3,089.10.

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