(Bloomberg) — Ether has captured the attention of cryptocurrencies with its biggest gain in more than a month. The jump was in conjunction with speculation about the prospects for a U.S. exchange-traded fund (ETF) application to open the token.
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The second-largest digital asset was trading at around $3,710 as of 11:20 a.m. Tuesday in Singapore, up 8.5% from U.S. time. Ether’s 62% year-to-date rise is on par with market leader Bitcoin’s 68% rise.
“There has been some talk about Ether ETF issuers meeting with the U.S. Securities and Exchange Commission,” said Edward Chin, co-founder of digital asset hedge fund Parataxis Capital.
Following a court reversal last year, a skeptical SEC reluctantly acquiesced to a U.S. spot Bitcoin ETF in January. These products have amassed $59 billion in assets since their January launch, making them one of the most successful debuts ever for the fund category. This caused Bitcoin to hit an all-time high in mid-March.
Traders are bracing for a potential rally in ether if the SEC allows ETFs to directly hold the token. Investment giants such as BlackRock and Fidelity Investments have applied to set up such funds, but there are doubts whether regulators will grant permission.
While it is acknowledged that Bitcoin is a commodity, the SEC argues that most other tokens are effectively unregistered securities and that the digital asset sector is therefore rife with violations of the law. Explicitly identifying Ether as an unregistered security would add many challenges to ETF deployment.
Approval of the Spot Bitcoin Portfolio by the SEC also hinges on the correlation between CME Bitcoin futures and the price movements of the digital asset itself, which is deemed sufficient to allow detection of fraud or manipulation. Ta.
In a late March note, Bloomberg Intelligence ETF analysts James Seifert and Eric Balchunas said there was a 75% chance that the ETF would reject Ether applications by May. They said the SEC could rely on data that “shows that the correlation between spot and futures markets is relatively weak.”
The SEC did not immediately respond to a request for comment on discussions between the agency and potential issuers over the Ether ETF application. The request was made after normal business hours.
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