Ethereum bounces back from dip, Gensler refuses to comment on SEC's decision on ETH ETFs

• Ethereum ETFs will likely be approved as US lawmakers have urged SEC Chair to give the green light.
• SEC Chair refused to comment when asked to give a preview on spot ETH ETF decision on Thursday.
• Ethereum may rally more than Bitcoin did if SEC approves spot ETH ETF applications.

Ethereum (ETH) bounced back after a brief dip on Thursday as US lawmakers penned a letter to Securities & Exchange Commission (SEC) Chair Gary Gensler, urging him to approve spot ETH ETFs. Hong Kong regulators are also discussing whether issuers can offer ETH staking to investors.

Also read: Ethereum bulls await ETF approval as BlackRock, Bitwise, Grayscale submit amended ETH ETF filings

Daily digest market movers: Lawmakers pens letter to Gensler

Ethereum is the most trending digital asset, with only a few hours left before the SEC's decision on spot ETH ETFs — specifically Van Eck's application.

A bipartisan group of Congress members penned a letter to SEC Chair Gary Gensler, suggesting the regulator approve spot ETH ETF applications and, eventually, other digital assets. According to the lawmakers, the "transparency and reporting requirements" of exchange-traded products (ETPs) offer crypto access to investors in a regulated way. They also suggested that the SEC apply the same principles it used in approving spot Bitcoin ETFs to evaluate applications for spot ETH ETFs "as the legal considerations pertinent to Bitcoin also apply to Ether."

When asked by some reporters to preview the SEC's decision on Ethereum ETFs on Thursday, Gensler declined, stating, "I don't have anything on this particular filing." However, while on stage at an event in Washington, Gensler reaffirmed that most crypto assets are securities. "There's 15,000 or 20,000 tokens in this field. They do not operate as currency," said Gensler. "Not every crypto token is a security [...] but I believe, again without prejudging, most are," he added.

The SEC asked exchanges to submit updated 19b-4 forms of issuers on Monday. As of Wednesday, exchanges have submitted the forms of all applicants except Hashdex. The total number of issuers that have submitted amended 19b-4 filings includes BlackRock, Bitwise, Grayscale, Van Eck, Ark 21Shares, Fidelity, Franklin and Invesco.

Fidelity and Grayscale also updated their S-1 applications to remove any language related to staking since experts are of the opinion that the SEC may reject applications that include the feature.

Read more: Ethereum continues to rally as five potential spot ETH ETF issuers have already submitted amended filings

The 19b-4 filings are what national exchanges like the NASDAQ or the New York Stock Exchange (NYSE) submit to the SEC to seek approval for listing new products on their trading platforms. In the context of ETFs, S-1s refer to the initial registration forms detailing how a fund would be managed and track the underlying asset's price.

The SEC must approve both 19b-4s and S-1s before the ETFs can launch.

While information from experts and issuers' engagement with the SEC suggests the agency will likely approve the 19b-4 filings, they've also warned that nothing is guaranteed until the actual order comes out.

Industry experts also believe that spot ETH ETF S-1 applications may take days or weeks to receive approval from the SEC.

Meanwhile, despite Ethereum's popularity and price growth in the past few days, Hong Kong's spot Ethereum ETFs haven't risen in subscriptions or trading volume. On May 22, the single-day net subscription was 62.8 ETH, and the total single-day transaction volume was only $390,300, according to data from SoSoValue. 

According to Tree News, the Hong Kong Securities & Futures Commission (SFC) is in talks to allow issuers to provide staking features for investors. The low interest may have prompted issuers to use staking as an incentive to attract investors.

ETH technical analysis: Ethereum may rally more than 75% if ETF is approved

Ethereum is trading around $3,818 after a sharp drop from the $3,952 price level. The brief decline cut short a move to tackle the $4,093 resistance formed on March 11. However, the $3,730 support proved strong enough to weather the drop.

ETH/USDT 4-hour chart

The sudden dip was likely caused by selling pressure from MEV trading firm Symbolic Capital Partners, which sold 6,968 ETH worth $27.38 million. Following the swift dip, ETH long and short liquidations are almost equal at $31.22 million and $31.21 million, respectively.

Also read: US House of Reps passes bill aiming to regulate cryptocurrencies

If the SEC approves spot ETH ETFs, Ethereum could break the resistance and beat its all-time high of $4,878. Bernstein analysts have predicted that an approval may cause ETH to rally 75% to $6,600 like Bitcoin did when the SEC approved its spot ETF.

Many others predicted that ETH may soar higher than that given its smaller market capitalization compared to Bitcoin and the market not yet pricing in an approval.

However, a shocking disapproval could send ETH’s price crashing down and potentially breaking the support of $2,852.