Ethereum’s (ETH) Regulatory Odyssey: Examining the Possible Effects of SEC Rejections on Price Stability

Estimated read time 3 min read
  • After a decade of waiting, the SEC has greenlighted nearly a dozen spot Bitcoin ETFs, prompting speculation about the potential for similar products tracking Ethereum’s performance.
  • However, delays and doubts surrounding ETH ETF applications have emerged, with experts questioning the SEC’s motives and its potential rejection’s impact on Ethereum’s price.

After a decade of waiting, rejecting, and delaying at best, the United States Securities and Exchange Commission finally greenlighted nearly a dozen spot Bitcoin ETFs at the start of 2024. Their impact on BTC’s price has been undeniable as the demand for those products among traditional investors has skyrocketed. Now that there are existing exchange-traded funds tracking the performance of at least one cryptocurrency, the community speculates on whether there will be a follow-up, particularly with ETH.

The ETH ETF Applications

Numerous companies within and outside of the cryptocurrency industry want to follow the example with Bitcoin and have products tracking the performance of the second-largest digital asset. Perhaps the two biggest names with current applications with the SEC are BlackRock and Fidelity. However, the regulator keeps delaying making a decision on either of their filings.

Amid the latest SEC delays, industry experts started questioning the agency’s motives and drew comparisons with how the watchdog operated before rejecting countless BTC applications throughout the past ten years. As such, the overall optimism around the ETH ETF applications started to wind down in recent weeks despite previous predictions that the Commission will approve all filings in May 2024.

The Potential Impact on ETH’s Price

While the community keeps speculating on whether potential Ethereum ETFs will be a flop compared to BTC ETFs, we decided to ask Perplexity – the popular ChatGPT alternative – about what would happen to ETH’s price if the SEC indeed rejects all current proposals. Interestingly, the AI chatbot believes the agency’s decision, no matter what it will be, won’t have such a big impact on ETH, at least in the short term.

“If the SEC rejects all spot Ethereum ETF applications, the impact on ETH’s price may not be as significant as initially anticipated. Analysts and experts suggest that whether the ETFs are approved or rejected, it may not have a substantial effect on the altcoin’s price in the short term.”

This theory could have some merit, given the BTC ETF rejections in the last ten years. Bitcoin became immune to the SEC’s actions after so many rejections. However, the Ethereum case is quite different since the asset doesn’t have such a long history with the regulator.

Additionally, once the Commission greenlighted all Bitcoin ETFs, the underlying asset’s price went on a massive rollercoaster in the next few weeks. Once the demand and inflows increased, so did BTC’s price. The vice-versa effect is also visible, as we have seen in the past week

As the cryptocurrency market eagerly awaits the SEC’s decision on spot Ethereum ETF applications, the potential rejection could initially spark uncertainty and volatility. However, history suggests that Ethereum’s price may not be as significantly impacted in the short term. Whether approved or rejected, the long-term trajectory of Ethereum’s price may rely more on broader market dynamics and adoption trends rather than regulatory decisions alone.

vivian

Vivian Njoroge is a seasoned crypto and blockchain news writer with a passion for decoding the complexities of the digital financial world. Armed with a keen eye for emerging trends and a knack for simplifying intricate concepts, Vivian brings a unique blend of expertise and enthusiasm to her writing. Her articles, characterized by clarity and depth, aim to keep readers abreast of the ever-evolving landscape of cryptocurrencies and blockchain technology.

You May Also Like

More From Author