Spot ETH ETF approval: could the USD be at risk?
Key points
- Speculation broke Monday afternoon that the SEC could end up approving a Spot Ethereum ETF, which previously seemed unlikely
- Ethereum prices rose 20% following the news
- The SEC is set to decide Thursday whether the VanEck ETF (and possibly others) will be approved or denied
- While this decision could have implications for US dollar, it is unlikely to significantly shift USD demand in the near term
Ethereum ETF approval odds rise dramatically on SEC rumors
The possibility of Ethereum (ETH) ETF approvals has seen a significant shift, with Bloomberg ETF analyst Eric Balchunas moving his approval odds from 25% to 75% on Monday afternoon following speculation that the SEC has materially changed their stance from a likely 'no'. His latest opinion is that the SEC could preliminarily approve the 19b-4 filings this week, while still granting themselves time to review each application further ahead of S-1 approval. This rumor suggests a dramatic turn in the SEC's approach towards cryptocurrency ETFs, sparking interest among investors about the potential implications for the broader market.
Ethereum prices soared 20% after the news
Following Balchunas's tweet of the ETF approval rumors, Ethereum's price surged by 20% in the day following, reaching $3,800 from a previous $3,150. Prices remain elevated midweek above $3,700. This sustained spike illustrates the market's optimistic response to the news and highlighting the high sensitivity of cryptocurrency prices to regulatory developments as this story shares many similarities to the Bitcoin ETF approval process.
Will ETH ETFs be approved on Thursday?
What does this mean for the US dollar?
While traditionally there hasn’t been a notable correlation between Ethereum and the US dollar, the potential influx of investments into ETH could exert a slight inverse impact on the dollar’s value. As investors might sell USD to invest in ETH, there could be a minor depreciation in the dollar, especially if enthusiasm around ETH ETFs continues to grow. Similarly, the US dollar could see upside if the ETFs get denied and the price of Ethereum falls. There is also long-term speculation that cryptocurrencies will eventually replace fiat currencies, and an ETH ETF would be a step in the right direction for enhancing cryptocurrency accessibility.
In the short term, however, US dollar prices will likely still have a greater dependence on macroeconomic factors like the cooling US economy and the possibility of lower interest rates this year. It is also possible that these trends, along with growing geopolitical tensions, have an effect on Ethereum demand if investors are dissuaded from entering speculative assets like cryptocurrencies. Even so, approval of an ETH ETF this week could significantly boost Ethereum's price, while a rejection may lead to a sharp decline.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
This information has been prepared by tastyfx, a trading name of tastyfx LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. tastyfx accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.
