Ethereum
Why did the price of Ethereum (ETH) increase today?
Ethereum (ETH) recently hit a two-month high of $3,700 with an impressive 18% rise on May 20. This rally is fueled by the buzz surrounding the possible approval of a Ethereum Spot ETF. Bloomberg analyst Eric Balchunas raised the probability to 25% to 75%, highlighting the political pressure on the US SEC and its limited interaction with ETF applicants.
But what are the chances of getting an ETH ETF approved this year? Let’s go.
Understanding the SEC’s position
Balchunas shared his view that the SEC is encouraging exchanges like the NYSE and Nasdaq to update their ETF filings, although no official confirmation has been released. Analyst Nate Geraci pointed out that the SEC’s decision is pending, which could push VanEck’s Ethereum spot ETF past its May 23 deadline. This delay gives the SEC time to carefully evaluate the complexities and risks associated with Proof-of-Stake (PoS) cryptocurrencies.
Analyst Reviews and Political Influences
According to the SEC, analysts Seyffart and Balchunas update their predictions on the SEC decision regarding spot Ether ETFs, suggesting the SEC could approve them instead of rejecting them as previously planned. This change is based on recent SEC filings, statements from SEC Chairman Gary Gensler, and internal reports indicating political pressure on Democrats to support crypto. Seyffart highlighted the growing political nature of the issue and hinted at other related filings soon, highlighting the potentially significant impact on the crypto community if approval occurs.
Impact on the Ethereum Options Market
Ethereum ETF speculation has had a significant impact on the upcoming $3 billion ETH options expiration. On Deribit, open interest for Ether options on May 24 is $867 million, and for May 31 it is $3.22 billion, eclipsing open interest on CME and OKX . Deribit’s call/put ratio reveals a strong preference for call options, indicating bullish sentiment.
If ETH stays above $3,600 by May 24, only $440,000 worth of puts will be exercised, benefiting call option holders with $397 million in open interest. Similarly, as of May 31, 97% of puts are valued at $3,600 or less, becoming worthless if ETH trades above that level. Net open interest could favor calls $1.92 billion if ETH hits $4,550, or $1.44 billion to $4,050.
Legislative support for crypto
In short, the unexpected rise in the price of Ether surprised options traders, benefiting bullish strategies. These profits will likely be reinvested, keeping ETH price momentum positive post-expiration. Traders can use complex strategies with different expiration dates to optimize their positions, although the exact impact is difficult to predict.
Additionally, US lawmakers are mulling pro-crypto bills such as the FIT21 Act and the CBDC Anti-Surveillance State Act. The lack of opposition from Democratic leaders demonstrates strong support for the crypto industry. Stakeholders are rallying behind the FIT21 Act, pushing for its approval to drive innovation and growth in the crypto sector.
Also discover: Ethereum Price Prediction: Will ETH Price Hit a New ATH by the End of May?
With an ETF on the table, Ethereum could be on the verge of a major breakthrough. Were excited. And you?