Experts reduce likelihood of Ethereum ETF endorsement to 35%

In a recent change of outlook, Bloomberg analysts have notably decreased the prediction for the approval of a spot Ethereum exchange-traded fund (ETF) by May — assigning a probability of only 35%.

Eric Balchunas noted that this figure has dropped significantly from earlier estimates, which were between 60% and 70%.

This adjustment indicates an increasing doubt regarding the regulatory approval for Ethereum ETFs, contrasting with the previously more favorable viewpoint.

No sign of activity

The caution expressed by analysts follows recent talks involving Coinbase, Grayscale, and the SEC about the possible transformation of Grayscale’s Ethereum Trust into an ETF. While such discussions might typically suggest a positive trend, the lack of follow-up commentary from the SEC has dampened expectations.

Balchunas and other analysts — including James Seyffart and Eleanor Terret — pointed out that there is a noticeable absence of activity within regulatory circles, even with the deadline approaching in two months.

In comparison, there was a surge of activity among the SEC and spot Bitcoin ETF applicants for over 10 weeks prior to the approvals.

Seyffart stated:

“This Ethereum ETF cycle feels like the opposite of Bitcoin ETF approval odds at the moment. The more we see/hear (and don’t see/hear), the less optimistic I become.”

Nonetheless, the analysts mentioned that activity could increase in the upcoming days. They also indicated that there remains an expectation for an ETH ETF to be approved at some point this year — even if not in May.

Cautiously hopeful

Despite these diminished expectations, some industry figures, such as Variant Fund’s Chief Legal Officer, Jake Chervinsky, continue to express cautious optimism, suggesting that the next few weeks could yield clearer indications regarding the SEC’s stance.

However, he also expressed concerns that the SEC might categorize Ethereum as a security and may be reluctant to approve the applications without judicial intervention.

The overall sentiment seems to be shifting towards skepticism, with major investment banks like JPMorgan and TD Cowen also forecasting unlikely approval by May.

In contrast to the Bloomberg analysts, the crypto market-making firm GSR has retained a more optimistic outlook, initially estimating a 70% chance of approval.

However, the firm recently acknowledged that this optimism could diminish if there is no observable progress in the coming month.

Meanwhile, Standard Chartered has repeatedly stated that the SEC is likely to approve Ethereum ETFs in May.

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