The cryptocurrency market surged on Monday, driven by growing optimism that the U.S. Securities and Exchange Commission (SEC) may be warming up to the idea of approving a spot Ethereum exchange-traded fund (ETF). Ethereum skyrocketed over 18%, marking its largest gain in 18 months, while Bitcoin briefly breached the $70,000 mark before pulling back slightly.
Market momentum shifted after Bloomberg ETF analyst Eric Balchunas announced he and colleague James Seyffart had increased their estimated probability of a spot Ethereum ETF approval from 25% to 75%. This sudden shift in sentiment sent shockwaves across digital asset markets, with Ethereum climbing from around $3,000 to a peak of **$3,633** during the session.
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What’s Driving the Ethereum Rally?
At the heart of the rally is fresh regulatory signaling. According to multiple sources, the SEC on Monday requested that at least one potential issuer of a spot Ethereum ETF update its Form 19b-4 filing. This form outlines rule changes required for a fund to be listed and traded on a national securities exchange.
The request suggests the SEC is moving toward a decision. As reported by CoinDesk, three insiders confirmed the SEC urged exchanges to expedite updates to these filings—hinting that an official approval could come as early as Thursday.
However, it's important to note: approval of the 19b-4 does not mean the ETF will immediately launch. Issuers must also secure approval for their S-1 registration statement, which details the fund’s structure, risks, and operations. Unlike the 19b-4 process, there is no fixed timeline for S-1 clearance, leaving room for delays.
Chris Newhouse, DeFi analyst at Cumberland Labs, observed a significant shift in trader behavior:
“Traders and analysts across social platforms are now speculating that the SEC may lean toward approval. Many had written off the chance entirely—now they’re rushing to build positions.”
This rush is evident in both spot and derivatives markets. Trading volume spiked across major exchanges, with Ethereum outperforming Bitcoin—a strong indicator that Ethereum ETF speculation is the primary catalyst.
Why an Ethereum ETF Matters
While Bitcoin ETFs launched successfully in January 2024, Ethereum represents a different class of digital asset. As the backbone of decentralized finance (DeFi), non-fungible tokens (NFTs), and smart contracts, Ethereum has deeper utility and institutional interest.
An approved spot Ethereum ETF would:
- Allow traditional investors to gain exposure without holding crypto directly
- Increase regulatory legitimacy for Ethereum and the broader crypto ecosystem
- Drive institutional capital inflows similar to what Bitcoin experienced post-ETF
Analysts believe this potential approval could mirror the Bitcoin ETF effect, where billions flowed into approved funds within weeks of launch.
SEC’s Deadline Looms: May 23 Decision Window
The SEC has until May 23, 2025, to make a final determination on at least one pending spot Ethereum ETF application. While some industry insiders remain cautious—citing lukewarm private discussions between fund issuers and regulators—the recent flurry of activity signals a more favorable stance than expected.
Bloomberg reported last Friday that certain asset managers anticipate rejection due to less enthusiastic internal dialogue compared to the lead-up to Bitcoin ETF approvals. Yet market pricing now reflects confidence that at least one application will clear the regulatory bar.
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Market Reaction: Ethereum Outpaces Bitcoin
One of the most telling signs of ETF-driven momentum is Ethereum’s outperformance against Bitcoin. Historically, when macro-level catalysts like halvings or inflation data dominate, Bitcoin leads. But this time, ETH/BTC ratio spiked sharply, signaling that Ethereum-specific news is driving action.
On-chain data supports this:
- ETH spot trading volume rose over 40% in 24 hours
- Open interest in Ethereum futures climbed by 15%
- Whale wallets accumulated over 500,000 ETH in the past three days
These metrics suggest not just retail excitement but meaningful institutional-grade interest building beneath the surface.
FAQ: Your Ethereum ETF Questions Answered
Will a spot Ethereum ETF definitely be approved?
While nothing is guaranteed, the odds have improved significantly. Analysts now estimate a 75% chance of approval, up from just 25% weeks ago. The SEC’s request for updated filings is a positive procedural signal.
How soon could an Ethereum ETF start trading?
If both 19b-4 and S-1 approvals are granted quickly, trading could begin within weeks. However, the S-1 review has no deadline, so delays are possible even after initial green lights.
What impact would approval have on Ethereum’s price?
Past precedent suggests substantial upside. After spot Bitcoin ETFs launched, BTC rose over 60% in three months. A similar trajectory for ETH could push prices toward $4,500–$5,000 in the medium term.
Could rejection still happen?
Yes. The SEC may cite concerns over market manipulation or investor protection—arguments previously used against crypto ETFs. However, with improved surveillance agreements between exchanges and regulators, these hurdles appear weaker now.
Does this affect other altcoins?
Indirectly, yes. Positive sentiment around Ethereum often spills over into broader altcoin markets, especially DeFi and Layer-1 tokens. Projects like Chainlink, Solana, and Polygon may see renewed interest.
Is this rally sustainable?
Short-term volatility is expected. However, if ETF approval materializes, long-term fundamentals strengthen. Ethereum’s transition to proof-of-stake, deflationary issuance, and dominant DeFi position support higher valuations.
Final Outlook: A Pivotal Moment for Crypto
The current surge isn’t just another speculative wave—it reflects a maturing market responding to tangible regulatory progress. For years, crypto advocates have argued that mainstream adoption hinges on accessible investment vehicles like ETFs. With Bitcoin already approved and Ethereum nearing the finish line, that vision is becoming reality.
Whether approval comes this week or in the following months, one thing is clear: the regulatory tide is turning. Institutional infrastructure is expanding, compliance frameworks are improving, and investor demand remains robust.
As decision day approaches, traders and investors alike should stay informed, manage risk carefully, and recognize that we may be witnessing the next major milestone in crypto’s evolution.
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