Ethereum prices have rallied by about 20% in recent days, hovering around US$3,800 on Thursday amid growing optimism that the US Securities and Exchange Commission (SEC) will approve this week one or more exchange-traded funds (ETFs) that invest directly in the world's second-biggest cryptocurrency by market capitalisation.
Following the SEC's approval of spot Bitcoin ETFs earlier this year, investors are keeping a close eye on the progress of spot Ethereum ETFs in anticipation of SEC approval, with VanEck the first to seek the regulator's approval, followed this week by ARK Invest, according to Cryptomind, a Thai digital asset services and investment product developer.
Ethereum has been outperforming Bitcoin, climbing to a new weekly high of $3,838 before the price consolidated at around $3,800 yesterday.
The SEC has until an Aug 7 deadline to endorse BlackRock's iShares Ethereum Trust, which is seen as having a better chance of receiving the regulator's approval than other funds.
If the SEC approves spot Ethereum ETFs, there could be profit-taking on Ethereum in the short term before the price gradually rises again, with funds flowing from various institutions to the token, according to Cryptomind. The same was true after Bitcoin spot ETFs were launched.
Prices are likely to increase in June and July ahead of the approval deadline, noted the digital asset company.
Ether is the native token of the Ethereum blockchain -- the most important commercial highway in crypto. The network is popular for decentralised financial services, where investors trade, borrow and lend via automated software protocols rather than traditional intermediaries.
On Monday, Bloomberg Intelligence said the estimated probability that a spot Ether ETF would win SEC approval had increased to 75% from 25%.
The value of the token rose almost 14% on Monday, the steepest advance since November 2022, before adding to the gains to change hands at $3,675 on Tuesday. Bitcoin at one point climbed towards $72,000, in sight of its mid-March all-time peak of nearly $74,000.
Some fund companies expect their Ethereum ETF requests to be rejected because their private talks with the SEC were not as robust as those that took place during the run-up to spot Bitcoin ETFs. BlackRock and Fidelity Investment, which have amassed $58.8 billion in assets, are seeking to start Ether funds. The digital asset industry views ETFs as a way of widening the cryptocurrency investor base to retail investors, hedge funds, pension funds and banks.