We want to provide a brief overview of where we stand in the approval process, as well as what the “option scenario” looks like for this event.
Approximately seven applications are under consideration, compared to 10 for BTC. The issuers remain the same, except for WisdomTree, Franklin Templeton, and Valkyrie. The SEC has extended the review period by 60 days. The initial decision deadline for March 31, 2024, has been moved to May 30, 2024.
One key difference that may affect the future decision is the uncertainty surrounding ETH’s legal status—is it a security, commodity, or broad-based financial commitment? There is no answer to this question. The decision on ETH’s status will depend on court rulings in Ripple v. SEC and Coinbase v. SEC.
Repeating the Grayscale BTC situation for ETH ETF.
Currently, there are approximately 3 million ETH in the Grayscale ETH Trust.
(https://platform.arkhamintelligence.com/explorer/entity/grayscale)
Moreover, the share price in the trust has been trading below the assets it corresponds to for a considerable period. This presents an interesting arbitrage opportunity, especially if the approval of an ETF on ETH occurs shortly.
Option positioning in Ethereum (using Laevitas analytical materials).
Volatility—As can be seen from the dynamics of RR and BF, market participants are not expecting news regarding ETFs until the end of May, which would positively affect ETH dynamics.
And if the current expiration (March 29) has generally been “built up” over the last 3-4 months, the next expiration is scheduled for June 28.
There are several factors in the market that influence the choice of one strategy over another. Of course, given what we see now, the approach should be “defensive, but with a focus on growth.” It is worth noting that Bitcoin will influence the dynamics of ETH. What is currently affecting the price of Bitcoin:
- Liquidity levels
- USDT printing: any similar news, regardless of the network, leads to growth within 1-2 trading sessions
- Short squeeze in Microstrategy stocks: There is a persistent rumor in the market that a particular fund decided to play on the convergence of the spread between stocks and Bitcoin (Microstrategy holds a Bitcoin package). In other words, they were selling stocks and buying Bitcoin. To finance their short positions, they have to sell Bitcoin, and judging by the dynamics of the options on the stock, the drama there is still ongoing.