Ether jumps 16% on US ETF approval speculation

The price of ether has jumped more than 16 per cent on speculation that US regulators will give the green light to stock market funds that invest in the world’s second-biggest cryptocurrency.

The sharp rise, which began last night, caught many traders by surprise as most had expected the Securities and Exchange Commission to delay or reject the first ether exchange traded fund by a Thursday deadline. Bitcoin also rose 6 per cent overnight to just over $71,000.

The renewed pressure on the SEC comes after the agency in January gave approval to exchange traded funds that invest bitcoin, giving way after years of delays. The spot bitcoin ETFs have drawn more than $10bn into funds run by assets managers such as Fidelity, BlackRock and Ark Investment Management, and helped fuel bitcoin’s rise to a record high of more than $73,000 in March.

Ether hit a six-week high of $3,700 after several media reports said issuers had been asked by the SEC to file amended applications for their spot ether ETFs.

“Given the radio silence and lack of [SEC] engagement on the filings, consensus was that an ether exchange traded fund would be denied,” said Gautaum Chhugani, an analyst at Bernstein.

The first decisions, on funds run by VanEck and Ark Investment Management, are due on Thursday and Friday respectively.

But analysts said this first stage of the approval process might not mean investors could shortly start trading the funds. Nate Geraci, president of The ETF Store, a financial adviser, said on social media site X that the SEC had no deadline to sign off the second, final stage.

Chhugani said the political dynamics around crypto in Washington were shifting, after 18 months of regulatory crackdowns and Democrat-led blocks to regulation.

He noted that former president Donald Trump had hosted an event for crypto enthusiasts and last week Congress agreed to overturn a controversial accounting rule that penalised banks wanting to hold digital assets for customers.

“All of these, in our view, have likely caused a last-minute change of heart in the incumbent administration, perhaps realising the anti-crypto stance may turn out to have a political cost,” he said.

Ether is the cryptocurrency linked to the ethereum blockchain, which is widely used as the platform for building new cryptocurrency projects. Its technology can hold assets and enables programmers to code functions for buying and selling into smart contracts.

Several other asset managers also have filed applications with the SEC for ETFs that invest directly in ether, including Fidelity and BlackRock.

Geoff Kendrick, an analyst at Standard Chartered, said he expected the price of ether to rise to $8,000 by the end of the year as “once investors realise ETH is the ‘big tech’ of digital assets they are likely to embrace it”.