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JPMorgan puts spot Ether ETF approval chance in May below 50%

Ethereum ETF hangs in balance with the SEC lack of decision about the crypto asset being a security.

JPMorgan puts spot Ether ETF approval chance in May below 50%

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JPMorgan has cast doubt on the likelihood of the Securities and Exchange Commission (SEC) approving an Ethereum spot exchange-traded fund (ETF) in May, when the deadline to approve the ARK 21Shares application expires. The investment bank pegs the probability of approval at no more than 50%.

Through a note to clients sent on Jan. 18, the investment bank showed a cautious stance towards a potential approval.

“While we are sympathetic to the arguments favoring Ether’s classification as a commodity, we remain skeptical of the SEC reaching such a decision by May,” wrote JPMorgan analysts.

An Ether (ETH) spot ETF in the US is anticipated by the crypto community since the narrative around Bitcoin (BTC) ETFs gained traction in June last year. The expectations of approval rose after the SEC gave a green light for the exchange-traded funds indexed to BTC spot prices.

However, the unclear regulatory stance by the US regulator when it comes to crypto, especially ETH, could delay the approval of an ETH spot ETF per JPMorgan analysts. On two different hearings conducted by the US Congress’ House Financial Services Committee, Gary Gensler, SEC chairman, refused to confirm if ETH is seen as a security by the regulator.

Moreover, the SEC pursued the crypto exchanges Binance US and Coinbase with lawsuits in June 2023. Crypto assets similar to ETH, such as Polygon (MATIC), Cardano (ADA), and Solana (SOL), were classified as securities in both lawsuits. This adds up to the uncertainty of Ether’s regulatory outcome in the US, thus blurring predictions about a potential ETH spot ETF approval.
What if?

When compared to 2023 previous years, a 50% chance of an ETF indexed to a spot crypto price approval is significant. Rony Szuster, a research analyst at Brazilian exchange Mercado Bitcoin, estimates a positive outcome on ARK 21Shares and other ETH spot ETF applications, which includes BlackRock, Invesco, and Grayscale, until July 2024.

“A massive approval could lead to a 32.3% price growth for ETH in 2024, and this positive impact could extend until 2026, with an 82.7% price gain for the period,” Szuster points out.

However, he highlights that the same pullback happening in Bitcoin prices after its spot ETF approval could be seen with Ethereum as well.

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