Cryptocurrency markets have grown more optimistic about US Securities and Exchange Commission (SEC) approving exchange-traded funds (ETFs) that invest directly in , the second-largest token after .
Given the SEC’s prior approval of a Bitcoin ETF, denying an Ethereum spot ETF would require the SEC to present new arguments. Bernstein believes there is a reasonable chance of an Ethereum spot ETF approval by May, with a near-certain probability over the next 12 months.
“The regulatory setup for Ethereum is similar to Bitcoin, and the success of Bitcoin ETFs has set a precedent that asset managers are unlikely to relinquish easily,” Bernstein analysts noted. “We estimate a 50% likelihood of approval by May and a near-certain probability within the next year.”
As the Bitcoin trade gains momentum, Bernstein analysts suggest it may be time to shift focus to Ethereum. While Bitcoin’s price has tripled from its 2023 low, Ethereum has doubled.
Ethereum, which currently boasts a market cap of around $350 billion, is well-positioned for similar institutional adoption due to its staking yield dynamics, environmentally friendly design, and institutional utility in building new financial markets.
Ethereum futures have been trading as a digital commodity on the CME for the past 2.5 years, with an Ethereum futures ETF live since October 2023. Major asset managers such as Blackrock (NYSE:), Fidelity, and Grayscale are advocating for an Ethereum ETF.
Institutions are not only interested in launching ETH spot ETFs but also in leveraging Ethereum to build transparent and open tokenized financial markets. According to Bernstein , this extends beyond asset gathering to “transforming financial markets” and launching “accessible, global asset management products” on Ethereum’s decentralized ledger.
“Ethereum holds significant strategic value to institutions as the leading tech platform for financial market transformation, unlike Bitcoin, which is viewed more like digital gold,” Bernstein stated.
While competitors such as , SUI, and Aptos position themselves as faster, more integrated blockchain designs, Ethereum has opted for a scalability roadmap driven by an open ecosystem of faster chains built on top of Ethereum, known as roll-ups.
Despite criticism for fragmentation and complex user experiences, this open ecosystem allows applications to build dedicated chains, offering speedy and customized user experiences.
“As Ethereum’s scalability roadmap unfolds, it will further solidify its position as the backbone of decentralized financial applications,” Bernstein analysts concluded.
