The cloud of regulatory scrutiny has lifted from Ethereum (ETH), potentially paving the way for price growth. On June 19th, 2024, the U.S. Securities and Exchange Commission (SEC) officially closed its investigation into whether ETH should be classified as a security.
While industry observers like Consensys believe the SEC’s withdrawal removes a major hurdle, legal experts caution that this isn’t a final ruling. The decision simply means the investigation is on hold for now.
The short-term impact remains unclear. The price has been stable since the news, following a similar pattern after the spot Ether ETF approval in May. However, analysts are generally bullish on ETH’s long-term prospects.
Conor O’Neill of Blockcircle believes a “major regulatory barrier” has been removed for Ethereum, setting a positive precedent for global regulators. He predicts a significant price increase for ETH, barring unforeseen events.
The launch of spot Ether ETFs on July 2nd is expected to further fuel demand for ETH. Traditional markets are likely to inject capital into these ETFs, driving up the price. O’Neill highlights the long-term positive impact of ETFs on ETH.
A temporary price dip could occur in the short term as some investors sell the news. However, O’Neill believes this is likely to be followed by a strong upward trend.
The SEC’s approval of Ether ETFs comes with limitations. Staking, a popular feature, cannot be offered due to the SEC’s concerns about its security classification. This could limit ETH’s appeal as an institutional asset and potentially dampen long-term price growth.
Large investors might withdraw their holdings from Grayscale’s Ethereum Trust after the launch of ETFs, just like with Bitcoin. However, O’Neill believes Grayscale has reduced its fees to stay competitive and expects its ETH holdings to increase with the ETF launch.
O’Neill predicts ETH will follow a similar price path to Bitcoin, with a dip followed by a surge. However, he suggests the surprise factor of the approval might lead to a more significant rise for ETH compared to Bitcoin.
Will Altcoins Follow Ethereum’s Lead?
An ETH price increase could have a positive spillover effect on the altcoin market, similar to what happens with Bitcoin. Altcoins previously accused of being securities by the SEC, like Solana’s SOL, Cardano’s ADA, and Polygon’s MATIC, might benefit from the SEC’s retreat.
Projects like Aave, Chainlink, Arbitrum, Optimism, and Base could see a boost, according to O’Neill. However, staking capabilities offered by some of these projects might still raise red flags with the SEC.
The upcoming U.S. presidential election adds another layer of uncertainty. A potential win by Donald Trump, known for his pro-crypto stance, could lead to changes in the SEC’s leadership and its approach to staking and altcoin ETFs.
The rapid approval of Ether ETFs, the growing number of ETF providers, and the SEC’s retreat from its investigation suggest a potential shift in the regulatory landscape. These developments mark a significant moment for Ethereum and the entire cryptocurrency market.
