Ethereum ETFs' odds of approval improve as it appears Biden admin perhaps wants to appear more crypto friendly: Bloomberg ETF analyst

After weeks of pessimism when a couple of top Bloomberg ETF analysts viewed the possibility of the U.S. government approving spot ether ETFs as unlikely, they now see the chances of the new financial instruments being approved as much more likely.

"James Seyffart and I are increasing our odds of spot ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue)," Bloomberg Senior ETF Analyst Eric Balchunas posted to X on Monday

Seyffart, also an ETF analyst at Bloomberg, also posted his commentary to the social media platform . "Things are taking a turn for the better on Spot ethereum ETF approvals this week," he said.

Following Balchunas and Seyffart's post, ether spiked 11.3%, according to The Block’s price page for the token. Ether had been trading at $3,090 at around 3:13 p.m. ET on Monday before jumping to $3,439 as of 3:34 p.m. ET. The token’s price has since fallen to $3,381.

Conversations between at least one potential issuer of a spot ether ETF and the Securities and Exchange Commission have been progressing, according to a person familiar with the talks who asked to remain anonymous.

"It appears as though some of the politics of this may have changed rapidly," Balchunas told The Block, adding that the fact that crypto appears to be, in general, becoming a more politicized issue ahead of the upcoming presidential election. While he said he can't be completely certain, President Joe Biden's administration may want to appear less obstinate regarding crypto.

Recently, former President Donald Trump has positioned himself as a candidate that will be friendlier to the crypto industry. He has both said he'd accept political donations in the form of crypto and dined with buyers of NFTs fashioned in his likeness.

"If [spot ether ETFs] are denied that's a story that would just go on and on" considering how much attention spot bitcoin exchange-traded funds have been garnering, said Balchunas. He added that similar to Biden potentially vetoing a bill overturning the SEC's move to establish certain accounting standards for firms that custody crypto, a denial of spot ether ETFs could possibly add fuel to the idea the current president's administration is anti-crypto.

The first deadline for a slew of proposed spot ether ETFs is May 23, with VanEck's proposal up first. One factor that could lead to the SEC denying the application is its hesitation in labeling the cryptocurrency.

The question of whether the SEC has jurisdiction over ether has emerged as an important issue in recent weeks as reports surfaced that the agency is subpoenaing companies that deal with the Ethereum Foundation .

Consensys said the SEC had decided ETH +14.38% is a security in a complaint it lodged against the agency last month.

Firms' engagement with the SEC on a potential spot ether ETF has been weaker than how institutions dealt with the agency's approval of spot bitcoin ETFs earlier this year, according to a person familiar with the matter.

In the wake of ETH's price appearing to rise on the Bloomberg analysts renewed outlook for spot ethererum ETFs gaining approval, ether liquidations also spiked during the price surge. Within the past hour, $34.63 million worth of ether short positions had been liquidated, according to data from crypto liquidations tracker Coinglass.