Coinbase Analyst: The market underestimates the possibility of Ethereum spot ETF approval

Coinbase analyst David Han said that although the market generally believes that the U.S. authorities will not release it in the short term, the possibility of the Ethereum spot ETF being approved is still underestimated.

David Han said in a report last week: "We believe the market may underestimate the timing and probability of approval. Ethereum may still have the possibility of unexpected rises in the coming months, and it is obviously not There will be significant sources of oversupply, such as token release or miner selling pressure.”

The U.S. Securities and Exchange Commission (SEC) must meet before May 23 and May 24. , decide whether to approve the Ethereum spot ETF listing applications submitted individually by VanEck and Ark Invest/21Shares.

Expectations that these applications will be approved this month have been significantly reduced. Bloomberg ETF analyst Eric Balchunas described the chances of the applications being approved as slim to almost zero because the SEC has always remained silent on issuers.

However, Coinbase stated that it is still unclear whether an Ethereum spot ETF will appear in the United States. It does not know when it will appear or whether it will appear. The reason is that the difference between CME Group futures products and spot prices The correlation between them is very high, which is also the reason why the Bitcoin spot ETF was approved for listing.

David Han said that assuming this correlation is maintained, other reasons for the Ethereum spot ETF not being approved are likely to be related to the differences between Ethereum and Bitcoin, which is Ethereum’s proof of equity. mechanism.

Coinbase believes that without clear regulatory guidance on staking, an Ethereum spot ETF is unlikely to be approved soon because Ethereum includes a mechanism for staking rewards.

It is worth noting that the Ethereum spot ETF update proposal proposed by Ark Invest last week does not include proof of equity, which is equivalent to removing the pledge part of the application.

David Han said: "That is to say, we believe that this should not affect the status of uncollateralized ether."

Prices from Polymarket, the decentralized prediction market platform based on Ethereum, show that the Ethereum spot ETF has a 16% chance of being approved in May, while the Grayscale Ethereum Trust (ETHE) is currently trading at A discount of 24% to net assets.

However, if the application for an Ethereum spot ETF is rejected, litigation may result. Coinbase believes that the chance of SEC approval is 30% to 40%.

Bloomberg ETF analyst Eric Balchunas said last week that newly released details of the Ethereum spot ETF application show that the SEC may treat Ethereum as a security and therefore reject the ETF application.

Ethereum has not performed as well as other large cryptocurrencies this year. It has only risen 33% this year, which is not as good as Bitcoin’s 57% increase and Solana (SOL)’s 64% increase.

According to TradingView data, the Ethereum/Bitcoin ratio is currently at 0.045, which is at its lowest since April 2021.

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