Will Ethereum Be Next After Bitcoin Spot ETF Approval?

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The approval of Bitcoin spot ETFs in the U.S. has ignited a wave of excitement across the crypto market. Just one week after the SEC greenlit 11 Bitcoin spot ETFs, investors and traders are asking: What’s next? Is Ethereum’s turn finally here?

Interestingly, while Bitcoin itself hasn’t surged post-approval, Ethereum (ETH) has taken the spotlight — climbing sharply past $2,700, marking a new high. This unexpected rally reflects growing market sentiment: if Bitcoin got the nod, Ethereum might be next.

But is this optimism justified? Can a spot Ethereum ETF realistically gain SEC approval by the expected deadline of May 23? And more importantly — is now a good time to invest in ETH ahead of this potential catalyst?

Let’s dive into the facts, regulatory hurdles, and market dynamics shaping the future of Ethereum ETFs.

The Momentum Behind Ethereum ETF Speculation

The U.S. Securities and Exchange Commission’s (SEC) long-awaited approval of Bitcoin spot ETFs was a historic moment. For the first time, traditional investors can gain exposure to Bitcoin through regulated brokerage accounts — without holding private keys or navigating crypto exchanges.

👉 Discover how institutional adoption is reshaping crypto markets

This shift unlocked access to trillions in traditional financial (TradFi) capital. Analysts estimate nearly **$2.9 billion** flowed into the new Bitcoin ETFs in their first week — despite over $1.2 billion being withdrawn from Grayscale’s GBTC.

Now, all eyes are on Ethereum, the second-largest cryptocurrency by market cap and the backbone of decentralized applications, DeFi, and NFTs.

Traders are positioning early for a potential spot ETH ETF, fueling a 25% rise in the ETH/BTC price ratio — breaking out of a 1.5-year downtrend. This isn’t just speculation; it’s a strategic bet on regulatory momentum.

But regulatory approval is far from guaranteed.

Why Might the SEC Reject a Spot Ethereum ETF?

Despite the optimism, several key obstacles remain.

1. Is Ethereum a Security?

The central debate hinges on whether the SEC classifies ETH as a security. Unlike Bitcoin, which SEC Chair Gary Gensler has consistently labeled a commodity (not a security), Ethereum’s status remains ambiguous.

Ethereum operates on a proof-of-stake (PoS) consensus mechanism, where investors can stake ETH and earn yield. Critics argue this creates an investment contract under the Howey Test, potentially making ETH a security.

Nikolaos Panigirtzoglou, managing director at JPMorgan, believes there's less than a 50% chance the SEC will classify ETH as a non-security before May 2025 — a prerequisite for ETF approval.

2. SEC’s Historical Resistance

The SEC has rejected numerous crypto ETF applications over concerns about market manipulation and investor protection. While the court-ordered approval of Bitcoin spot ETFs set a precedent, Ethereum’s ecosystem is more complex — with smart contracts, staking, and decentralized governance adding layers of regulatory scrutiny.

Bloomberg ETF analyst Eric Balchunas puts the odds of ETH ETF approval at 70%, lower than his initial 90% prediction — signaling growing caution.

Why Approval Could Still Happen

Despite skepticism, there are strong arguments in favor of approval.

1. Precedent from Ethereum Futures ETFs

In October 2023, the SEC approved futures-based Ethereum ETFs — indirectly acknowledging ETH as a commodity. If futures products are acceptable, denying spot ETFs could be seen as inconsistent.

👉 See how futures and spot markets differ in crypto investing

2. Legal Precedent from Ripple Case

In a landmark ruling, a U.S. court determined that digital tokens themselves are not securities — only how they are sold matters. This decision weakened the SEC’s argument that staking rewards automatically make ETH a security.

Since spot ETFs don’t involve staking, they fall outside the scope of securities law concerns — at least from a technical standpoint.

3. Regulatory Pressure and Market Demand

With Bitcoin ETFs approved and global crypto adoption rising, the SEC faces increasing pressure to act consistently. Denying Ethereum while approving Bitcoin could be challenged in court — especially given the similarities in their treatment as commodities.

Moreover, institutions are already building infrastructure for ETH ETFs. Firms like BlackRock and Fidelity have filed applications, signaling confidence in eventual approval.

Will a Spot ETH ETF Be Bullish?

Even if approved, don’t assume instant gains. The crypto market often follows a “buy the rumor, sell the news” pattern.

Bitcoin’s price dropped 12% from its pre-ETF peak after launch, as traders cashed out. A similar dynamic could unfold with Ethereum.

Additionally, demand for Ethereum futures ETFs was underwhelming — only $1.7 million traded on launch day versus hundreds of millions for Bitcoin products. This raises questions about institutional appetite for ETH-based funds.

However, there’s a crucial difference:
Bitcoin traders had been accumulating for six months ahead of approval — front-running the event. With Ethereum, positioning is less crowded, meaning an approval surprise could spark stronger momentum.

If approved, spot ETH ETFs could unlock long-term inflows from pension funds, endowments, and retail investors — just like Bitcoin.

Frequently Asked Questions (FAQ)

1. What is a spot Ethereum ETF?

A spot ETH ETF directly holds Ethereum tokens and tracks their real-time market price. Unlike futures ETFs, it doesn’t rely on derivatives — offering pure exposure to ETH’s price movements.

2. When will the SEC decide on Ethereum ETFs?

The final decision deadline for several applications is May 23, 2025, though delays are possible.

3. Does ETH being a security block ETF approval?

Yes — if the SEC classifies ETH as a security, spot ETFs would face major legal hurdles. Current evidence suggests it’s treated as a commodity, but no official statement exists.

4. How did Bitcoin ETF approval affect Ethereum?

ETH outperformed BTC after the announcement, rising over 25% against Bitcoin — signaling renewed market focus on Ethereum’s ecosystem and ETF potential.

5. Can I invest in Ethereum now in anticipation of an ETF?

Yes, but with caution. While ETF approval could drive long-term demand, short-term volatility and regulatory uncertainty remain high.

6. What happens if the SEC rejects ETH ETFs?

Rejection would likely cause a short-term price drop, but wouldn’t kill Ethereum’s fundamentals. Development in DeFi, Layer 2s, and institutional use cases would continue unaffected.

Final Thoughts: Is Now the Time to Buy Ethereum?

The path to a spot Ethereum ETF is uncertain — but not unlikely. Regulatory precedents, legal rulings, and institutional momentum all point toward eventual approval.

While short-term price action may be volatile, long-term investors should consider Ethereum’s foundational role in Web3:

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An ETF approval wouldn’t just bring capital — it would validate Ethereum’s status as a mainstream financial asset.

Until then, stay informed, manage risk, and watch the May 2025 deadline closely.

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