Research Summary

The report discusses the recent approval of the Ethereum spot ETF and the factors behind this decision. It also explores the potential impact of the FIT21 bill on the cryptocurrency industry and predicts a possible rise in Ethereum’s price. The report further analyzes the chances of approval for the Solana spot ETF and provides insights into the underwhelming performance of Hong Kong’s cryptocurrency ETFs.

Key Takeaways

Ethereum Spot ETF Approval

  • Policy Foundation: The approval of the Ethereum spot ETF was based on the policy foundation laid by the approval of the Bitcoin spot ETF earlier this year. The SEC used an analytical framework called the Ark Test, which outlined key reasons for approval, including the existence of futures trading, small price deviation, and market maturity.
  • Political Considerations: The approval of the Ethereum spot ETF was also influenced by political considerations. The SEC faced potential legal challenges if it approved the Bitcoin spot ETF but rejected the Ethereum spot ETF. The approval might also be linked to the recent FIT21 bill.

Impact of FIT21 Bill

  • Regulatory Authority: The FIT21 bill addresses the jurisdictional dispute between the SEC and CFTC over cryptocurrency regulation. If passed, the SEC will no longer have the authority to regulate Ethereum as a security.
  • Decentralization Definition: The bill distinguishes between securities and commodity cryptocurrencies based on their level of decentralization. If a large holder owns more than 20% of the tokens, it is considered not decentralized enough and may be classified as a security.

Ethereum Price Prediction

  • ETH/BTC Exchange Rate: The report predicts that the ETH/BTC exchange rate could return to its previous level of above 0.06. If Bitcoin reaches $100,000 in the future, Ethereum’s price reaching $6,000–8,000 is also possible.

Solana Spot ETF Approval

  • Approval Chances: The report believes that the chances of the Solana spot ETF being approved are slim due to the lack of a futures ETF, insufficient decentralization, and a significantly lower market capitalization compared to Bitcoin and Ethereum.

Hong Kong’s Cryptocurrency ETFs

  • Underwhelming Performance: The underwhelming performance of Hong Kong’s cryptocurrency ETFs can be attributed to market size, funding restrictions, procedural and fee disadvantages, and competition with US ETFs.

Actionable Insights

  • Monitor Ethereum’s Performance: With the recent approval of the Ethereum spot ETF and the potential impact of the FIT21 bill, it would be beneficial to closely monitor Ethereum’s performance and market trends.
  • Understand Regulatory Changes: The FIT21 bill could significantly change the regulatory landscape for cryptocurrencies. Staying updated on these changes can help in making informed decisions.
  • Assess Decentralization Levels: The level of decentralization could become a critical factor in classifying cryptocurrencies as securities or commodities. Evaluating the decentralization levels of different cryptocurrencies could provide valuable insights.

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