Coinbase Analyst Says Ethereum ETF Could Come Earlier Than the Industry Thinks

There has been a lot of pessimism surrounding the possibility of the securities and exchange commission (SEC) approving an Ethereum ETF in the U.S.

The pessimism comes as a result of the SEC’s sentiments against crypto in general and Ethereum in particular. However, Coinbase analyst David Han says the market may be ‘underestimating’ the timing and odds of a potential Ethereum ETF.

“We think the market may be underestimating the timing and odds of a potential approval,” Han wrote in a Thursday report. “Ether may yet have the potential to surprise to the upside in the coming months [and] does not appear to have major sources of supply-side overhangs such as token unlocks or miner sell pressure.”

Since the approval of 11 Bitcoin ETFs in January this year, there has been an agitation for the approval of an Ethereum ETF as well. One of the top applicants for this is Grayscale, which is one of the approved Bitcoin ETFs.

However, analysts have increasingly become pessimistic on the possibility of an Ethereum ETF approval anytime soon. The pessimism stems from the attitude of the SEC towards ETH, which is the native currency for Ethereum.

Ethereum has an Edge

The SEC has long regarded Ethereum as a security instead of a commodity like Bitcoin. This has been one of the major concerns of analysts and also seen as a possible reason for denying the ETF applications already before the agency.

Han on the other hand believes that Ethereum has an edge over other proof of work networks since it is regarded to be a store of value just like Bitcoin and also as the go-to platform for all things decentralized applications and smart contracts.

“We find that ether’s ability to capture both store-of-value and technology-token narratives is demonstrated by its historical trading patterns. Ether trades at high levels of correlation to bitcoin, exhibiting behavior in line with bitcoin’s store-of-value patterns,” Han said. 

“At the same time, it also decouples from bitcoin during periods of prolonged bitcoin price appreciation like other altcoins, trading like a tech-orientated crypto. We think that ether will continue to straddle these roles, and has room to outperform in 2H24 despite underperforming YTD,” he concluded.

SEC to Decide Soon

The SEC has set May 23 and 24 to decide on the Ethereum ETF applications before it. This is heightening the tension in the Ethereum and crypto communities in general as we look forward to the decisions.

One thing seems certain though, if the SEC denies the applications, the companies that have filed the applications are likely to head to court as was the case with Bitcoin ETF applications.