Ethereum saw its biggest gain in 18 months, leading the rise in digital assets. At the same time, there is growing speculation that regulatory opposition to approving one or more exchange-traded funds (ETFs) that directly invest in the second-largest cryptocurrency is easing.
As of 4:49 pm New York time, ether rose as much as 14% to around $3490. Bitcoin also extended its gains, rising 5% to $69442.
According to ETF analyst Eric Balchunas,launchpadenjinstarterAfter he and his colleague James Seyffart increased the estimated probability of approval for a spot Ethereum ETF from 25% to 75%, native tokens on the Ethereum blockchain expanded their gains.
The U.S. Securities and Exchange Commission on Monday asked the issuer of a potential spot Ethereum ETF to update its 19b-4 filing, according to a person familiar with the matter who asked not to be named because of the confidential information involved. 19b-4 is a form used to notify the U.S. Securities and Exchange Commission of a rule change that would allow the fund to trade on an exchange. ETF issuers need to obtain SEC approval documents and S-1 registration statements before the product is officially launched.
Traders and analysts on social media are "now speculating that the SEC may be more inclined to potential approvals, and traders are now scrambling to open positions because many have completely ruled out approval, even the slightest possibility."
He added: "The sharp surge in trading volume and demand for spot and leveraged positions is evident in the market, and ETH has outperformed Bitcoin compared to Bitcoin, suggesting that ETH ETFs are a potential major driver."
After months of silence, the U.S. Securities and Exchange Commission is preparing to announce a decision on at least one ETF application that directly invests in ether by May 23. According to two people familiar with the matter who spoke on condition of anonymity, some fund companies are expected to be rejected because their private conversations with the SEC were not as enthusiastic as before the approval of the Bitcoin Spot ETF in January.
Despite Monday's rally, not every trader believed the SEC was building momentum for Ether ETFs.
"FalconX's derivatives division found that most of our counterparties were retreating from the SEC's actions because they expected the SEC's actions to be slower than the market expected," said Ravi Doshi, head of markets at FalconX.