Ethereum
How This Crypto Hedge Fund Will Trade the Ethereum ETF Decision – DL News
- SEC likely to reject Ethereum spot ETFs.
- But Ethereum could still rise in the aftermath of the event.
The deadline for the Securities and Exchange Commission to approve or deny Ethereum spot exchange-traded funds is just nine days away.
The outlook is bleak. Bloomberg Intelligence ETF analyst Eric Balchunas said DL News that he doesn’t wait for approval before the end of 2025. Punters on Polymarket, meanwhile, assign a 14% chance that the ETFs will be approved before May 31.
But the consensus around the SEC’s decision could provide an opportunity for crypto traders.
“Sell the rumor, buy the news”
There is an expression in the markets: Buy the rumor, sell the news.
It refers to the practice of accumulating an asset – a crypto coin or a company’s stock – before a scheduled bullish event, and discarding it after the announcement.
The launch of spot Bitcoin ETFs is a good example: Bitcoin rose 77% in the three months before approval, but crashed 20% immediately after the ETFs were given the green light.
Ethereum ETFs could offer a similar, but reversed strategy, said Quinn Thompson, founder of crypto hedge fund Lekker Capital. DL News.
He suggested that the rejection of Ethereum ETFs could lead to an upward price trend.
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“It’s clear that positioning and sentiment are trending lower heading into the event, given that the consensus is strongly in favor of a rejection,” Thompson said. “But given that everyone is largely on one side of the boat, you should look to tone it down. [the market’s expectations].”
“In these situations, you need a much better increase or decrease so as not to destroy the consensus. [into the event],” he added.
In other words, rejection is likely already priced in, and market participants could find themselves caught off guard if Ethereum suddenly spikes.
“My best guess is that this is not an event, as a likely rejection will hopefully be priced into the market,” said Brian Rudick, senior strategist at crypto trading firm GSR. DL News.
The warning signs are all there, Rudick said: the SEC’s lack of engagement with potential ETF issuers, Ethereum’s uncertain regulatory status, and the agency’s investigation into the Ethereum Foundation.
Thompson, meanwhile, said the SEC’s reasoning behind the early rejection would likely affect any business strategy.
“If there is a rejection due to litigation, I could see that dragging the market down a little bit,” he said.
The SEC has until May 23 to decide whether to approve or reject asset manager VanEck’s application to launch an Ethereum spot ETF.
Crypto market players
- Bitcoin is up 1% in the last 24 hours and is trading at $61,835.
- Ethereum is up 0.3% at $2,918.
What we read
Tom Carreras is a markets correspondent at DL News. Do you have a tip on Ethereum ETFs? Contact us at tcarreras@dlnews.com.