Cryptocurrency markets have become more optimistic about the US Securities and Exchange Commission (SEC) approving exchange-traded funds (ETFs) that invest directly in , the second largest token after .
Given the SEC's prior approval of a Bitcoin ETF, denying an Ethereum spot ETF would require the SEC to present new arguments. Bernstein believes there is a reasonable chance that an Ethereum spot ETF will be approved by May, with an almost certain chance over the next 12 months.
“The regulatory setup for Ethereum is similar to that of Bitcoin, and the success of Bitcoin ETFs has set a precedent that asset managers are unlikely to abandon easily,” the Bernstein analysts noted. “We estimate a 50% chance of approval by May and an almost certain chance within the next year.”
As Bitcoin trading gains momentum, Bernstein analysts suggest it may be time to shift focus to Ethereum. While the price of Bitcoin has tripled from its 2023 low, Ethereum has doubled.
Ethereum, which currently has a market capitalization of around $350 billion, is well positioned for similar institutional adoption due to its staking performance dynamics, environmentally friendly design, and institutional utility in building new financial markets.
Ethereum futures have been traded as a digital product on the CME for the past 2.5 years, with an Ethereum futures ETF active since October 2023. Major asset managers such as Blackrock (NYSE:), Fidelity and Grayscale They are advocating for an Ethereum ETF.
Institutions are not only interested in launching ETH spot ETFs, but also in leveraging Ethereum to build transparent and open tokenized financial markets. According to Bernstein, this extends beyond asset collection to “transform financial markets” and launch “global, accessible asset management products” on Ethereum's decentralized ledger.
“Ethereum has significant strategic value for institutions as a leading technology platform for financial market transformation, unlike Bitcoin, which is viewed more as digital gold,” Bernstein said.
While competitors like SUI and Aptos position themselves as faster, more integrated blockchain designs, Ethereum has opted for a scalability roadmap driven by an open ecosystem of faster chains built on top of Ethereum, known as roll-ups.
Despite criticism of fragmentation and complex user experiences, this open ecosystem allows applications to create dedicated chains, offering fast and personalized user experiences.
“As Ethereum's scalability roadmap develops, it will further solidify its position as the backbone of decentralized finance applications,” Bernstein analysts concluded.
