Ethereum
Coinbase Reveals Optimistic View of Ethereum ETF Approval, Expert Gives Opinion
- Coinbase analysts are optimistic about the future of Ethereum, citing strong demand drivers and unique scalability advantages despite current underperformance.
- They believe Ethereum retains key strengths such as its Solidity community, use of the EVM platform, and its crucial role in DeFi, supporting a strong case for approving spot ETH ETFs.
- Despite the challenges, the potential for regulatory and commercial acceptance of ETH ETFs remains high, with a 30-40% probability of approval noted amid growing political attention towards crypto.
Despite Ethereum’s relative underperformance compared to Bitcoin and the broader crypto market, Coinbase analysts have a positive outlook on the second largest crypto. They predict that ETH could surprise investors with better-than-expected performance later in the cycle.
David Han, research analyst for Coinbase Institutional, wrote that they “believe Ethereum has some of the most powerful persistent demand engines in crypto and retains unique advantages in its scaling roadmap.”
Han added that ETH can build on its historical business models, which indicates its dual advantages as a “store of value” and “technology token.”
Although Solana is a potential threat to Ethereum and the potential for a May ETH Spot ETF rejectionCoinbase still believes in the long-term prospects of the network.
We continue to believe that Ethereum’s long-term positioning remains strong and that it has significant advantages that significantly differentiate it from other smart contract networks.
Han adds that Ethereum’s strengths include the well-established Solidity developer community, widespread adoption of its EVM platform, ETH’s role as a crucial DeFi collateral, and the strong decentralization and security of its main network.
In addition, future advances in tokenization are expected to benefit ETH more than other layer 1 blockchains in the short term.
30-40% chance of approval, says analyst
Han further believes that the approval of spot ETH ETFs is likely due to their potential to provide regulatory clarity and access to new capital, similar to previously approved BTC ETFs.
These ETFs would allow ETH to access the same capital pools as BTC, which would significantly benefit its market position. The rationale for BTC ETF approvals, based on the correlation between CME futures and spot rates, also applies to ETH, supporting a strong case for approval, wrote the analyst.
We believe the chances of approval are close to 30-40%. As crypto begins to take shape as an election issue, it is also less certain, in our view, that the SEC would be willing to provide the political capital necessary to support a pushback.
Despite the uncertainties, like the SEC’s current non-commitment position and the unique challenges posed by Ethereum’s proof-of-stake mechanism, Han remains optimistic. Market indicators and political dynamics could push the SEC toward approval, with a potential reversal of initial rejections through litigation also likely, he concluded.
Matt Hougan: Bitcoin ETFs have opened the doors to crypto
Matt Hougan of Bitwise Asset Management agrees with this analysis, saying that Spot Bitcoin ETFs have opened the door for crypto ETFs. Hougan said CNBC says outdated US securities laws don’t fit the world of digital assets – but ultimately what everyone wants is a “safe and secure platform where investors are protected and innovation is protected.”
Hougan added:
We have entered the era of ETFs for crypto. We have seen Bitcoin ETFs hit the market. We’ve seen the great things they’ve done for investors: reducing costs, improving regulation, improving safety, security and peace of mind. I think we will get there on Ethereum as well.
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