Ethereum’s Spot ETF Bid Fuels Analyst Debate: Blofin Report

As the crypto market basks in the glow of Bitcoin’s recently approved spot ETF, attention shifts to whether Ethereum will receive similar approval. However, analysts remain divided on the likelihood of this occurring. On the one hand, some experts argue that ETH’s proof-of-stake mechanism and perceived securitization risks could hinder its path to a spot ETF.

According to Blofin’s recent report, price manipulation risk, securitization risk, and the negative impact of the PoS system considerably reduce the possibility of spot ETH ETFs’ approval. Importantly, just 1,041 addresses account for more than half of the Ethereum supply, which means that under PoS voting mechanics, whales could unduly influence the network.

In contrast, BTC’s more evenly distributed supply and lack of voting rights mitigated such manipulation concerns for regulators. SEC filings reveal trepidation about “ether’s susceptibility to fraud and manipulation” given its concentrated stakeholders.

Ethereum’s Resilience Amid Regulatory Uncertainty

Yet others contend that whether spot ETH ETFs gain the green light is immaterial to Ethereum’s long-term prospects. “Fortunately, the final result will not affect the breakthrough of ETH price,” the Blofin report noted. Buoyed by robust demand and increasing institutional adoption, ETH has demonstrated remarkable resilience year-to-date despite the regulatory overhang.

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This bullish sentiment is supported by on-chain data, with the accumulation of BTC whales preceding the spot ETF approval and continuous sales from the largest Ethereum holders ever since January 2023, which implies that some have already taken profits. Besides, it appears that options for the future months are more inclined towards bullish positions than bearish ones in spite of the SEC’s resolution; hence, derivative markets anticipate an upward direction for ETH.

However, Ethereum may face fresh headwinds from ascendant challengers like Solana. “Other competitors will undoubtedly take away more of the cash liquidity originally belonging to ETH,” warns Blofin. With the crypto influx slowing to a “relatively stable” trickle, layer-1 rivals could siphon investment flows traditionally destined for Ethereum.

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Ultimately, whether regulators embrace or rebuff Ethereum’s spot ETF ambitions, its price trajectory seems decoupled from this specific catalyst. However, all eyes will be on how rapidly evolving market forces shape ETH’s future growth trajectory as the euphoria over BTC’s milestone subsides.