The cryptocurrency market surged on Monday as optimism around the potential approval of a spot Ethereum exchange-traded fund (ETF) sent shockwaves across digital assets. Ethereum led the rally with its biggest gain in 18 months, climbing over 18% to reach $3,633, while Bitcoin briefly broke above the psychologically significant $70,000 mark before pulling back slightly.
Market Momentum Driven by Regulatory Speculation
Growing speculation that the U.S. Securities and Exchange Commission (SEC) may be softening its stance on spot Ethereum ETFs has ignited investor enthusiasm. The momentum shift followed comments from Bloomberg Intelligence ETF analyst Eric Balchunas, who announced he and his colleague James Seyffart had raised their estimated probability of approval from 25% to 75%. This sudden change in outlook acted as a catalyst for the market-wide rally.
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Ethereum’s price jumped as high as 16.8% during U.S. trading hours, outpacing Bitcoin and reinforcing the belief that Ethereum-specific financial products are now at the forefront of regulatory consideration. The surge reflects a broader shift in market sentiment—what was once seen as a long-shot possibility is now being priced in as increasingly likely.
SEC Signals Possible Approval with Key Regulatory Move
According to multiple sources, the SEC requested that at least one prospective issuer of a spot Ethereum ETF update its Form 19b-4—a regulatory filing used by exchanges to propose rule changes that would allow a new security to be listed and traded. This procedural step is widely interpreted as a positive signal, suggesting the commission is moving toward finalizing its review process.
CoinDesk reported that three separate sources confirmed the SEC has urged exchanges to expedite updates to their 19b-4 filings for spot Ethereum ETFs, potentially paving the way for an announcement as early as Thursday. While this does not guarantee approval, it indicates that the regulatory body is actively engaging with issuers and progressing through formal channels.
However, approval of the 19b-4 filing is only one part of the equation. Issuers must also secure approval for their S-1 registration statements, which detail the fund’s structure, risks, and operations. One insider noted that the timing for S-1 approvals remains uncertain, as there is no statutory deadline for the SEC to act on these filings.
Why Ethereum Is Outperforming Bitcoin
The outperformance of Ethereum relative to Bitcoin highlights a crucial distinction in market dynamics. Analysts point to the anticipation of a spot Ethereum ETF as the primary driver behind the rally.
Chris Newhouse, DeFi analyst at Cumberland Labs, observed: “Traders and analysts across social platforms are now speculating that the SEC may lean toward approval. Many traders are rushing to build positions because they previously dismissed the idea entirely—even a slim chance seemed too remote.”
He added: “The surge in trading volume and demand for both spot and leveraged positions is evident. Ethereum’s superior performance compared to Bitcoin strongly suggests that an Ethereum ETF is the key catalyst.”
This divergence underscores a maturing crypto market where asset-specific news—not just macro trends—can drive outsized moves. While Bitcoin often serves as a barometer for overall market sentiment, Ethereum’s ecosystem of decentralized applications, smart contracts, and staking rewards makes it particularly attractive for institutional financial products like ETFs.
Regulatory Timeline and Investor Expectations
The SEC is required to make a decision on at least one spot Ethereum ETF application by May 23, ending months of uncertainty. However, expectations remain mixed. Last week, Bloomberg cited two unnamed sources indicating that some fund providers anticipate rejections due to less enthusiastic private discussions with the SEC compared to those preceding the January 2024 approval of spot Bitcoin ETFs.
Still, recent actions suggest a shift. The request for updated 19b-4 filings implies the SEC is not outright rejecting the concept but instead working through procedural requirements—often a precursor to final approval.
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FAQ: Understanding the Ethereum ETF Hype
Q: What is a spot Ethereum ETF?
A: A spot Ethereum ETF is an exchange-traded fund that directly holds Ethereum tokens, allowing investors to gain exposure to ETH’s price without buying or storing the asset themselves. It trades like a stock on traditional markets.
Q: How is this different from futures-based ETFs?
A: Futures-based ETFs track Ethereum futures contracts rather than actual ETH. Spot ETFs are considered more transparent and efficient because they reflect real-time ownership of the underlying asset.
Q: Why would an ETF approval boost Ethereum’s price?
A: Approval would open the door to massive institutional investment through retirement accounts, mutual funds, and advisory platforms. It also signals regulatory legitimacy, increasing mainstream adoption.
Q: Could the SEC still reject the applications?
A: Yes. Despite positive signals, the SEC has historically expressed concerns about market manipulation and investor protection in crypto markets. Final decisions depend on legal interpretations and internal deliberations.
Q: What happens after 19b-4 approval?
A: Once the 19b-4 is approved, the SEC must also clear the S-1 registration statement. Only after both are approved can the ETF begin trading on public markets.
Q: When could trading start if approved?
A: If both filings are accepted soon after May 23, some analysts estimate trading could begin in June or July 2025, depending on operational readiness.
Core Keywords Driving Market Interest
- Spot Ethereum ETF
- SEC approval process
- Ethereum price surge
- Bitcoin breaks $70K
- Crypto market rally 2025
- Form 19b-4 update
- Institutional crypto adoption
- Regulatory developments in crypto
These keywords reflect current search trends and investor inquiries, capturing both technical aspects of ETF mechanics and broader market movements.
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Final Outlook: Cautious Optimism Prevails
While Monday’s rally demonstrates strong market conviction, not all participants share the bullish view. Ravi Doshi, Market Head at FalconX, noted that many institutional traders remain skeptical about the pace of SEC action. “Our derivatives desk sees most counterparties downplaying expectations,” he said. “They believe the SEC will move slower than the market anticipates.”
Nonetheless, the combination of rising analyst confidence, procedural advancements, and strong price momentum suggests that the window for approval is narrowing—and potentially swinging open.
As May 23 approaches, all eyes will be on Washington. Whether or not full approvals materialize, the mere possibility has already reshaped investor behavior and reenergized the digital asset market. For those watching closely, this moment could mark a turning point in crypto’s journey toward mainstream financial integration.