Ethereum ETF Approval Expectations Heat Up: Can ETH Catch a Rally?

Ethereum ETF Approval Expectations Heat Up: Can ETH Catch a Rally?

As the U.S. Securities and Exchange Commission (SEC) advances its review of spot Ethereum ETFs, market sentiment is reignited. Following the approval of spot Bitcoin ETFs in early 2024, which triggered a strong rally, investors are now focused on whether Ethereum can replicate that performance. This article explores ETH's potential catch-up rally from three angles: regulatory developments, market comparisons, and valuation logic.

1. SEC Review Progress: From Hesitation to Acceleration

According to multiple foreign media reports, the SEC has recently engaged in technical discussions with several potential issuers regarding spot Ethereum ETF applications, covering key terms such as exchange trading rules, custody arrangements, and market surveillance protocols. Although the SEC previously debated Ethereum's "commodity status," the launch of Ethereum futures contracts on the Chicago Mercantile Exchange (CME) in 2024 has prompted a subtle shift in regulatory stance. Market consensus suggests that if the compliance framework for Bitcoin ETFs can be smoothly applied to Ethereum, approval could come as early as the first quarter of 2025. However, SEC Chair Gary Gensler has repeatedly emphasized in public remarks that the risk of market manipulation in Ethereum still needs assessment, leaving the final timeline uncertain.

2. Post-Bitcoin ETF Market Performance: Will History Repeat?

Looking back at the market performance after the approval of spot Bitcoin ETFs, data from CoinGecko shows that Bitcoin surpassed the $100,000 mark in 2024 and gained over 50% in the three months following approval. This rally was largely driven by the entry of traditional financial institutions—asset management giants like BlackRock and Fidelity attracted hundreds of billions of dollars in inflows to their ETF products. However, Ethereum's situation differs: on one hand, its market cap is about one-third of Bitcoin's, with relatively lower liquidity; on the other hand, Ethereum's ecosystem applications (such as DeFi and NFTs) are more dependent on on-chain activity rather than the simple "digital gold" narrative. Therefore, if an ETF is approved, ETH's short-term gains could be more dramatic, but volatility would also be higher.

3. ETH Valuation and Capital Inflow Potential: Is the Catch-Up Rally Justified?

From a valuation perspective, Ethereum's current price remains well below its all-time high set in 2021. According to a report by market analysis firm Messari, ETH's market cap to network active address ratio (NVT) is at historical lows, suggesting it may be undervalued. Additionally, Ethereum's deflationary mechanism (where part of transaction fees are burned after the EIP-1559 upgrade) continues to reduce its supply, providing fundamental support for long-term holders. If an ETF is approved, initial capital inflows are estimated to reach 30%-50% of those seen in Bitcoin ETFs. Given ETH's smaller market cap, this proportion could be sufficient to drive a significant catch-up rally. However, caution is warranted: if the macroeconomic environment deteriorates (e.g., rising expectations of Fed rate hikes), risk assets overall could face pressure, limiting ETH's gains.

4. Risks and Challenges: Dual Pressures of Regulation and Competition

Despite the optimistic outlook, Ethereum faces two major risks. First, the SEC may reject the application on the grounds that Ethereum is not fully decentralized, especially after its transition from PoW to PoS, which some regulators view as making it more akin to a security. Second, the rise of competitors like Solana and Avalanche is eroding Ethereum's market share. If ETH fails to achieve breakthroughs in Layer 2 scaling and user experience, its "dominant position" could be weakened. Furthermore, global regulatory divergence (such as differences between the EU's MiCA framework and U.S. regulations) could impact cross-border capital flows for ETFs.

5. Conclusion: Catch-Up Rally Possible, But Rationality Needed

In summary, the rising expectations for Ethereum ETF approval do provide a short-term catalyst for ETH, but whether a sustained catch-up rally materializes depends on the speed of regulatory approval, the scale of capital inflows, and the competitiveness of Ethereum's own ecosystem. For investors, historical data suggests that the first week after ETF approval often sees "buy the rumor, sell the news" volatility, so attention should be paid to actual developments. In the long term, Ethereum's technological upgrades (such as Danksharding) and institutional adoption rates remain key determinants of its value.

Risk Warning

The above content is for reference only and does not constitute any investment advice. The cryptocurrency market is highly volatile and uncertain. Investors should fully understand the associated risks and make decisions based on their own risk tolerance. Changes in regulatory policies, market sentiment fluctuations, and technical vulnerabilities can all lead to significant price declines.