Ethereum ETF Approval Expectations Heat Up, ETH Leads Major Cryptocurrencies: SEC Review Progress and Capital Flow Analysis

Ethereum ETF Approval Expectations Heat Up, ETH Leads Major Cryptocurrencies

Recently, the cryptocurrency market has entered a new structural rally, with Ethereum (ETH) outperforming major digital assets, showing a clear price strength over Bitcoin and other altcoins. Market consensus attributes this rally to a subtle shift in the U.S. Securities and Exchange Commission (SEC) stance on spot Ethereum ETFs, triggering a reallocation of capital.

SEC Review Progress: From Silence to Signals

According to sources close to regulators, the SEC has recently engaged in intensive "technical dialogues" with multiple asset managers applying for spot Ethereum ETFs. Unlike the procedural responses of past months, SEC staff are now proposing revisions on specific terms such as custody arrangements and market manipulation risk prevention. This change is interpreted by the market as substantive progress in the approval process.

Previously, SEC Chair Gary Gensler had remained non-committal in multiple congressional hearings, but recently he mentioned in a public event that "digital asset innovation requires balancing investor protection," a more moderate tone than before. Although the SEC has not announced a final decision date, industry media analysis suggests the most optimistic expectation is that the first batch of products could be approved by the end of Q3 2024.

Notably, the Chicago Board Options Exchange (CBOE) has proactively submitted multiple revised 19b-4 forms to pave the way for Ethereum ETF listings. This move is typically seen as a sign of the exchange's high confidence in approval prospects.

Capital Flows: Dual Drive from Institutions and Retail

Amid rising expectations, capital is shifting from Bitcoin to Ethereum. According to the latest CoinShares weekly report, Ethereum-related investment products have recorded net inflows for three consecutive weeks, with last week's net inflow hitting the highest single-week level since November 2021. Meanwhile, Bitcoin products saw slight net outflows, indicating some investors are adjusting positions to capture Ethereum's potential catalyst events.

On-chain data also confirms this trend. Glassnode data shows that the number of active addresses on the Ethereum network has increased by about 15% in the past two weeks, with a significant rise in large transactions (over $100,000). Analysts suggest this could signal institutional investors building positions through over-the-counter trades or exchanges.

On the retail side, the share of ETH spot trading volume in major markets like South Korea and the U.S. has risen from about 35% in early April to nearly 50% currently, reflecting a concentration of market sentiment toward Ethereum.

ETH Price Action: Breaking Key Resistance

Driven by these positive factors, Ethereum's price has continued to rise over the past week, successfully breaking above the upper bound of a two-month consolidation range. According to CoinGecko data, ETH briefly hit its highest level since May 2022, leading the top ten cryptocurrencies by market cap. In comparison, Bitcoin's gain over the same period was only single digits, and the ETH/BTC ratio rose to its highest since December 2023.

Technical analysts note that after breaking the psychological $4,000 level, the next resistance zone for ETH is around $4,200-$4,300. If it can hold above this range, the next target would be near its all-time high. However, short-term overbought signals have appeared, with the Relative Strength Index (RSI) entering the 70+ zone, suggesting a pullback risk.

Market Impact and Key Points to Watch

The expectation of Ethereum ETF approval is not only driving ETH's own price but also boosting activity across the Ethereum ecosystem tokens. Total Value Locked (TVL) in decentralized finance (DeFi) protocols has rebounded, and some native tokens of Layer 2 solutions have recorded double-digit gains.

However, the market must remain cautious about the risk of "buy the rumor, sell the news." If the SEC ultimately rejects or delays approval, ETH could face a significant correction. Additionally, the unresolved regulatory debate over whether Ethereum qualifies as a "security" remains the biggest uncertainty hanging over ETF approval.

Looking ahead, investors should focus on the following key dates: the SEC's final response deadlines for applications from VanEck, Ark Invest, and others (expected in late May to June), as well as potential digital asset regulatory framework drafts from the U.S. Congress.

Risk Warning

The above content is for reference only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and prices may experience significant declines due to regulatory changes, shifts in market sentiment, or technical risks. Investors should fully understand the relevant risks before making decisions and act according to their own risk tolerance.