Standard Chartered Predicts Ethereum (ETH) Surge to $4,000 Amid Spot ETH ETF Approval Anticipation

In a recent report, Standard Chartered Bank suggests that Ethereum (ETH), the second-largest cryptocurrency, could experience a substantial surge, potentially reaching $4,000 by May. The bank's analysts, led by research head Geoff Kendrick, base this forecast on the likelihood of regulatory approval for spot-based exchange-traded funds (ETF) in the United States.

Spot ETH ETF Approval Anticipation:

The analysts anticipate that the U.S. Securities and Exchange Commission (SEC) will follow a similar approach to what it did with Bitcoin, delaying decisions on spot ETF applications until granting approval close to the final deadline. May 23 is identified as a provisional approval date, coinciding with the final deadlines for applications submitted by asset managers VanEck and Ark/21Shares.

Market Underestimation and Comparison with Bitcoin:

According to the report, the current market underestimates the likelihood of approval. Standard Chartered sees "no fundamental reason" for the SEC to treat Ethereum differently than Bitcoin. Notably, ETH futures are already listed on the regulated Chicago Mercantile Exchange (CME), and Ethereum was not among the 67 cryptocurrencies labeled as securities during the SEC's legal battle with Ripple.

Price Performance Expectation:

Standard Chartered anticipates that ETH prices will either track or potentially outperform Bitcoin during the lead-up to the expected approval date on May 23. The report draws a parallel with Bitcoin's price surge, which saw an 85% increase from around $25,000 to approximately $47,000 when BTC ETFs gained approval.

Comparative Selling Pressure:

The report suggests that Ethereum might face less selling pressure post-ETF approval compared to Bitcoin. This is attributed to the Grayscale Ethereum Fund (ETHE) having a smaller market share of ether market capitalization than the Grayscale Bitcoin Fund (GBTC). Additionally, fewer shares are held by the FTX bankruptcy estate.

Market Dynamics:

Bitcoin experienced a notable drop to $38,500 from a high of $49,000 when BTC ETFs started trading, with market observers attributing this decline to GBTC fire-sales, resulting in around $5 billion in outflows since its conversion into an ETF.

Conclusion:

Standard Chartered's optimistic forecast for Ethereum's potential surge to $4,000 hinges on the anticipated approval of spot ETH ETFs in May. As the cryptocurrency market continues to evolve, the bank's analysis provides investors with insights into potential market dynamics and price movements based on regulatory developments. However, uncertainties in the crypto space remain, and market participants are advised to approach investment decisions with caution.