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The effect of the ETF process on Ethereum’s price may not be as catastrophic as some believe. After a decade of waiting, rejection, and at best postponement, the United States Securities and Exchange Commission finally signaled a green light to about a dozen spot Bitcoin ETF applications at the beginning of 2024. The demand for these products among traditional investors has increased rapidly, making the effects on Bitcoin‘s price undeniable.
SEC’s Attention-Grabbing Step
Numerous companies from within and outside the crypto sector want to follow the Bitcoin example and have products that track the performance of the second-largest crypto asset. Perhaps the two biggest names with current applications at the SEC, BlackRock and Fidelity, are standing out in this process. However, the regulatory body continues to delay making a decision on any of these applications.
Amid the latest SEC delays, industry experts have started questioning the reasons behind the agency’s actions and compared how this process worked over the past decade with countless Bitcoin applications being rejected before. Therefore, despite previous predictions that the Commission would approve all applications by May 2024, general optimism around Ethereum ETF applications has started to wane in recent weeks.
The latest analyses related to the matter indicate that the SEC plans to reject all spot Ethereum ETF applications with final deadlines in May.
Ethereum and the ETF Process
While the community continues to speculate whether potential Ethereum ETF funds will be a fiasco compared to Bitcoin ETF funds, we decided to ask the popular ChatGPT alternative Perplexity what would happen to Ethereum’s price if the SEC really rejects all current proposals. Interestingly, the AI-powered chatbot believes that regardless of the agency’s decision, it may not have a significant impact on Ethereum in the short term:
“If the SEC rejects all spot Ethereum ETF applications, the impact on Ethereum’s price may not be as significant as initially expected. Analysts and experts suggest that whether ETFs are approved or rejected, it may not have a significant effect on altcoin prices in the short term.”
Considering the rejection of Bitcoin ETF applications over the past decade, this theory might have some merit. Bitcoin has developed a sort of immunity to the SEC’s actions after so many rejections. However, the Ethereum process is quite different because the asset does not have such a long history with the regulator.
Additionally, when the Commission gave the green light to all Bitcoin ETF applications, the underlying asset’s price gained significant momentum over the following weeks. When demand and inflows increased, so did Bitcoin’s price. As we saw last week, the opposite effect could also occur.
