Renowned Bloomberg analyst Eric Balchunas gave three reasons why a spot Ethereum ETF might not come to fruition the way Bitcoin ETF did.
Bloomberg analyst Eric Balchunas, one of the experts who forecasted the arrival of the spot Bitcoin exchange-traded fund (ETF), does not share the same optimism for the spot Ethereum ETF. Here’s why!
Wen Spot Ethereum ETF?
Since last year, several investment management companies have filed for the approval of a spot Ethereum ETF. Pioneering this movement is Grayscale who filed for the conversion of its Ethereum Trust (ETHE) to a spot Ethereum ETF product in October 2023. The firm employed the crypto exchange Coinbase as the crypto custodian for its ether-based ETF.
The United States Securities and Exchange Commission (SEC) is the financial agency approving ETF products. On March 6th, the agency’s division of Trading and Markets met with Coinbase representatives regarding Grayscale’s Ethereum Trust.
Citing a memorandum from the SEC’s meeting, Balchunas stated that the meeting was not a “good sign,” as the agency has not given any comment to the issuers. Referencing the case of the spot Bitcoin ETF, the SEC gave comments to issuers ahead of its approval.
A second reason behind Balchunas’ reduced optimism for a spot Ethereum ETF is the fact that there is “no court loss hovering over.” Unlike its Bitcoin-based counterpart where court hearings were used to convince the agency, no court case has erupted concerning the ether-based product.
A third reason behind Balchunas’ statement is the lower correlation between the ETH spot and the futures market, as revealed in the memorandum. The metrics were lower than those of the BTC market.
Like Grayscale, other financial institutions have taken similar moves to file for approval of the spot Ethereum ETF product. Among them are BlackRock, VanEck, and Franklin Templeton. Recall that the British multinational bank Standard Chartered previously speculated that the spot Ethereum ETF will see approval from the SEC on May 23rd.
ETH Trades at $3,900
While enthusiasm for the potential approval of the ether-based ETF product builds up, ETH’s price continues to see significant increases in correlation to the leading cryptocurrency, BTC. Yesterday, ETH inched closer to its current all-time high (ATH) of over $4,800 seen on November 10, 2021.
Today, the second-largest cryptocurrency traded at $3,900, representing a 14.6% surge over the past week.
Source: CoinStats
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