Bloomberg Analysts Shock Wall Street by Tripling Ethereum ETF Approval Odds to 75%

The cryptocurrency market experiences a seismic shift as Bloomberg senior ETF analysts Eric Balchunas and James Seyffart dramatically revise their spot Ethereum ETF approval odds from 25% to 75% on May 20, 2024, sending Ethereum’s price surging more than 20% in just 48 hours. The sudden reversal in expert sentiment marks one of the most significant regulatory pivots in digital asset history, catching institutional investors and retail traders alike off guard.

The catalyst behind this stunning reassessment lies in behind-the-scenes movements at the U.S. Securities and Exchange Commission. According to multiple reports, the SEC has begun actively requesting that spot Ethereum ETF applicants update their 19b-4 filings — a procedural step that strongly signals the regulator is preparing for potential approval rather than denial. FOX Business reporter Eleanor Terrett confirms that her sources indicate the matter is “evolving in real-time,” adding weight to the growing optimism sweeping through crypto markets.

TL;DR

• Bloomberg analysts Eric Balchunas and James Seyffart raise Ethereum ETF approval odds from 25% to 75%
• The SEC reportedly asks ETF applicants to update 19b-4 filings, signaling a potential regulatory reversal
• Ethereum surges over 20% in two days, with $35.3 million in ETH short positions liquidated
• First approval deadline arrives on May 23 for VanEck’s Ethereum ETF filing
• Political pressure ahead of the 2024 U.S. election appears to influence the SEC’s shifting stance

The SEC’s Surprising Pivot

For months, the prevailing Wall Street consensus held that the SEC would deny spot Ethereum ETF applications, much as it had repeatedly rejected Bitcoin ETF proposals before finally approving them in January 2024. VanEck CEO Jan van Eck himself predicted a likely denial during a CNBC interview just days earlier. Katherine Dowling, general counsel for ETF applicant Bitwise, noted that “most people are universally expecting a disapproval order.”

But the landscape shifts dramatically on May 20. Balchunas posts on X that the SEC could reverse its expected stance and choose not to deny the pending applications, citing what he describes as an “increasingly political issue.” The timing proves critical — the first decision deadline for VanEck’s Ethereum ETF filing arrives on May 23, followed by ARK21 Shares on May 24 and Hashdex Nasdaq on May 30.

James Seyffart acknowledges the whiplash, posting: “Never gonna hear the end of this from the .eth people in my replies if this turns out to be true. But it’s what we’re hearing from multiple sources. Should see a bunch of filings over coming days if we’re correct.” The credibility of both analysts — who accurately predicted the spot Bitcoin ETF approvals — lends considerable weight to their revised forecast.

Ethereum’s Price Erupts

The market reaction proves swift and decisive. Ethereum jumps 8.3% within hours of the Bloomberg analysts’ announcement, pushing ETH from approximately $3,100 to above $3,660 by the end of the day. Over the two-day window surrounding the news, ETH surges more than 20%, recording its largest two-day gain since the collapse of FTX in November 2022.

The derivatives market tells an even more dramatic story. According to data from Coinglass, nearly $150 million in short positions are liquidated across crypto markets in the 24 hours following the news, with $35.3 million of that total coming from traders who had bet against Ethereum. The liquidation cascade amplifies the upward price pressure, creating a feedback loop that drives ETH even higher.

Bitcoin also benefits from the renewed optimism, trading steady near $67,000 before the announcement and pushing toward $71,400 by day’s end. The total cryptocurrency market capitalization expands significantly as altcoins join the rally, with the CoinMarketCap snapshot showing BTC at approximately $71,448 and ETH at $3,663 on May 20.

Political Undercurrents

The regulatory about-face arrives amid mounting political pressure on the Biden administration regarding its approach to cryptocurrency. With the 2024 presidential election approaching, the crypto industry has intensified its lobbying efforts, and digital asset policy has emerged as a genuine campaign issue. Coinbase Research Analyst David Han suggests that the election year dynamics could be influencing the SEC’s decision-making calculus.

Balchunas explicitly links the shifting stance to political considerations, noting that the Biden administration “perhaps wants to appear more crypto-friendly.” The administration faces criticism from both sides of the aisle — crypto advocates argue that overly restrictive regulation pushes innovation offshore, while skeptics maintain that the industry requires stricter oversight.

The SEC’s request for updated 19b-4 filings suggests a procedural pathway toward approval. Under this scenario, the commission could approve the exchange listing rules (19b-4 filings) while taking additional time to review the S-1 registration statements from individual issuers. This approach would allow the SEC to technically approve the ETFs while maintaining some regulatory flexibility on the timeline for actual trading to begin.

What the Filing Updates Mean

The 19b-4 filing represents the exchange-level rule change required to list and trade a new financial product. When the SEC asks applicants to update these filings, it typically indicates that regulators are working through final details rather than preparing a denial. ETF Store President Nate Geraci explains that the SEC could approve 19b-4 exchange listing rules while postponing its decision on S-1 registration statements, creating a two-phase approval process.

Among the applicants awaiting decisions are some of the largest asset managers in the world, including BlackRock, Fidelity, VanEck, ARK Invest (in partnership with 21Shares), Grayscale, Bitwise, Hashdex, and Invesco Galaxy. The involvement of these institutional heavyweights signals that the traditional finance establishment sees significant demand for Ethereum exposure through regulated, exchange-traded vehicles.

Market Participants React

Standard Chartered projects that both Bitcoin and Ethereum will reach new all-time highs if the ETF receives approval, with the bank’s analysts arguing that institutional inflows could mirror or exceed the patterns observed following the spot Bitcoin ETF launches in January 2024. Those Bitcoin ETFs attracted billions in net inflows during their first weeks of trading, fundamentally reshaping the market structure for BTC.

Trading volumes across major exchanges spike following the Bloomberg analysts’ revised odds. Open interest in Ethereum futures contracts increases substantially, reflecting both new positions and the forced unwinding of bearish bets. The funding rate for perpetual futures flips positive, indicating that traders are willing to pay a premium to maintain long positions — a classic signal of bullish conviction.

Why This Matters

The potential approval of spot Ethereum ETFs represents far more than a single regulatory decision. It signals a fundamental shift in how U.S. regulators classify and treat Ethereum specifically and could establish precedents for other digital assets seeking similar institutional pathways. The fact that the SEC appears willing to extend the same ETF framework it granted Bitcoin to Ethereum suggests a broader acceptance of cryptocurrencies as legitimate asset classes worthy of mainstream financial infrastructure. For investors, the developing situation underscores the outsized impact that regulatory decisions continue to exert on crypto markets — and the importance of monitoring policy signals alongside traditional technical and fundamental analysis.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk, and readers should conduct their own research before making investment decisions. Past performance is not indicative of future results.