Spot Ethereum ETF to Boost ETH to $4,000, Says Standard Chartered
Standard Chartered Bank, a British multinational bank, published a report on Tuesday, predicting that spot Ethereum ETF will likely win regulatory approval in the U.S. by May 23. The report, led by research head Geoff Kendrick, argues that the SEC will follow the same strategy as it did with Bitcoin ETFs, which were approved on January 10 after several delays.
The Case for Spot Ethereum ETF
The bank estimates that the market is underestimating the chances of an approval, but sees no fundamental reason for the SEC to treat Ethereum differently than Bitcoin. According to the report, Ethereum futures are also traded on the regulated Chicago Mercantile Exchange (CME) and the SEC did not classify Ethereum as a security in its legal dispute with Ripple.
The report also expects Ethereum prices to track or outperform Bitcoin prices in the comparable period before the approval date. As per the report, Bitcoin surged 85% from around $25,000 in mid-June, when asset management giant BlackRock filed for an ETF, to roughly $47,000 when the spot ETFs won approval.
The Impact of Spot Ethereum ETF on the Market
The report by Standard Chartered analyzes the potential impact of spot Ethereum ETF on the market, especially on the selling pressure and the staking rewards. Ethereum will face less selling pressure than Bitcoin after a potential ETF approval, the report suggests. Also, the Grayscale Ethereum Fund (ETHE) has a smaller market share of Ethereum market capitalization than the Grayscale Bitcoin Fund (GBTC), with even fewer shares held by the FTX bankruptcy estate.
Furthermore, Bitcoin tumbled to as low as $38,500 last week from a $49,000 high on January 11 when Bitcoin ETFs started trading, with market observers attributing the drop to GBTC fire-sales with some $5 billion in outflows since its conversion into an ETF.
Moreover, the first type of Ethereum ETFs in the U.S. will likely track spot Ethereum price and not include staking rewards. The report compares this with the European market, where both types of ETFs exist, such as AETH, which is the largest ETF that includes staking yield rewards. However, the report points out that AETH has higher fees than ETH, which offset the staking rewards.
The Outlook for Ethereum
Ethereum’s upcoming upgrade, called Dencun or Proto-Danksharding, which aims to improve its scalability, security, and energy efficiency is also highlighted in the report. The upgrade is supposed to benefit the Ethereum price, as it will increase the value captured within the Ethereum ecosystem, lower the Layer 2 fees, and keep the staking rewards higher for longer.
In all, Ethereum crypto has a strong case for spot ETF approval, and this could boost its price to $4,000 by May. The report also maintains its optimistic outlook on crypto, especially on price trends. Reaffirming the previous prediction, Bitcoin could reach $100,000 by the end of the year and $200,000 by the end of 2025.
