Ethereum

Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, is showing signs of a potential upside move. Key indicators are turning bullish, and this positive momentum may be triggered by an increase in market buying pressure. Optimism is growing about Ethereum’s near-term prospects.

In this article, we will explore the key indicators signaling this upside potential and discuss what this could mean for Ethereum’s price trajectory.

Technical Indicators: Key Signals Pointing to an Upside Move

4-Hour Chart Analysis

Currently, the price of Ethereum on the 4-hour chart is showing bullish momentum. It is attempting a move toward the 100-day Simple Moving Average (SMA) and the 4-hour bearish trendline. Since breaking above the $3,200 mark, Ethereum has maintained its bullish sentiment. This price stability could lead to a potential rally toward the $3,400 resistance level.

The 4-hour Relative Strength Index (RSI) also suggests that Ethereum’s price may start a bullish move toward the $3,400 resistance level. The signal line of the RSI indicator is maintaining its bullish sentiment above 50% and is currently rising toward the overbought zone.

1-Day Chart Analysis

On the 1-day chart, Ethereum’s price is still trading below the 100-day SMA and the bearish trendline. However, the crypto asset is attempting a bullish move toward the $3,400 resistance level. Since crossing above $3,051, Ethereum has shown bullish resilience, keeping its pace above this level. If Ethereum breaks above both the bearish trendline and the 1-day SMA, it could potentially start a bullish rally.

A close examination of the 1-day RSI formation reveals that Ethereum could sustain its bullish rally above the 1-day SMA and the bearish trendline toward the $3,400 resistance mark. The signal line of the indicator has moved out of the oversold zone and is heading to 50%.

Assessing Ethereum’s Upside Potential

If Ethereum starts a rally toward the $3,600 resistance level and closes above it, it may continue to move upward to challenge the $3,959 resistance. When this level is breached, the digital asset may experience a further price increase toward the $4,275 resistance level and possibly other levels above.

However, if Ethereum encounters a pullback at $3,460, it may start to decline toward the $3,151 support level. Additionally, the crypto asset may see further price declines to challenge the $2,895 support target and perhaps other levels below if this level is broken.

As of the time of writing, Ethereum’s price is trading around $3,333. It has increased by 2.73% in the past day, with a market capitalization of over $394 billion and a trading volume of over $11 billion. There has been a 24-hour increase of 4.11% in its market capitalization and a 27.64% decrease in trading volume.

Justin Sun’s Influence on Ethereum

Addresses potentially linked to crypto tycoon Justin Sun, creator of Tron (TRX) and former executive of Huobi (now HTX), have accumulated billions of dollars worth of Ethereum since February. On July 13, one of these addresses withdrew 14,436 ETH from Binance, worth $45.51 million.

SpotOnChain reported this recent activity, linking the Ethereum address ‘0x43594da‘ to Justin Sun. Previously, the wallet sent $45 million in Tether USD (USDT) to the exchange three days before the withdrawal. At that time, Ethereum was priced at $3,117 per token, and Sun could have purchased the token since then. By the withdrawal time, Ethereum was trading at $3,152, signaling a multi-millionaire position built with a 1.1% spread.

According to SpotOnChain, other addresses potentially owned by the crypto tycoon have accumulated 377,188 ETH since February 8. The report calculates a cost of $1.15 billion at an average price of $3,049 per token. Thus, so far, holding $50 million in unrealized profit, which is a 4.4% gain over the initial investment.

Who is Justin Sun?

Justin Sun is a prominent figure in the cryptocurrency world and rose to fame as the founder of the Tron blockchain. He has been a controversial figure known for his aggressive marketing tactics and bold claims. Despite this, he has shown interest in Ethereum’s ecosystem, particularly in decentralized finance (DeFi).

Sun’s relationship with Ethereum is complex. Tron was initially built on Ethereum before launching its own blockchain. Despite this, Sun remains involved in Ethereum’s ecosystem. He has acquired BitTorrent (BTT) and serves as an advisor to Huobi Global, a major cryptocurrency exchange now renamed HTX.

Sun’s recent actions, including large Ethereum purchases, have sparked speculation about his intentions in the crypto market. His ability to generate buzz and his substantial wealth have made him a closely watched figure in the industry.

In conclusion, Ethereum is gearing up for gains with several bullish indicators signaling potential upside. Key technical indicators on both the 4-hour and 1-day charts suggest a possible rally toward higher resistance levels. Additionally, influential figures like Justin Sun are making significant moves in the Ethereum market, further fueling speculation and interest. With a market capitalization of over $394 billion and a trading volume of over $11 billion, Ethereum’s price trajectory remains a hot topic in the crypto community.

Introduction to Ethereum Staking

Staked Ethereum has reached a new milestone, with over 27% of the total supply currently being staked. This means that more than 32.6 million ETH is now securing Ethereum’s proof-of-stake network. The rise of Ethereum staking has brought up concerns about centralized firms controlling too much ETH.

Concerns Over Centralized Staking

Some people worry that having too much Ethereum staked by a few centralized firms can be risky. It could lead to these firms having too much control over the network. This has become a major topic of discussion as the crypto market eagerly awaits the potential launch of spot Ethereum ETFs in the U.S.

Regulatory Concerns for ETFs

Spot Ethereum ETFs in the U.S. are facing regulatory concerns. Providers of these ETFs won’t be able to stake their ETH due to these rules. This means they cannot participate in staking to earn rewards. As a result, they are looking for other ways to benefit from holding Ethereum.

Anticipation for Ethereum ETFs

The crypto market is excited about the possible launch of spot Ethereum ETFs. However, the approval process by the SEC has been slower than expected. Bloomberg ETF analyst James Seyffart mentioned that these ETFs might start trading as early as next week or by the week of the 15th.

Recent Developments in Ethereum ETFs

Recently, Bitwise filed an amended S-1 form just before the July 8 deadline, showing that their product is almost ready for launch. Following this, VanEck also filed an amended S-1 form. These filings are crucial steps towards launching the first spot Ethereum ETFs in the U.S.

Innovative Approaches to Ethereum Staking

With ETFs unable to stake, traditional finance players are finding new ways to get involved. For example, Franklin Templeton, which manages $1.6 trillion in assets, plans to launch a fund focused on altcoins and staking rewards. Meanwhile, Purpose Investments in Toronto already has an Ethereum fund that can stake its ETH.

The Impact of Staking on Ethereum’s Future

The rise in staked ETH has been steady, even though there was a brief slowdown after the Shanghai upgrade in spring 2023. As of now, Ethereum is trading just below $3,000, down 14% over the past week due to broader market volatility.

SEC Approval Process

The SEC’s approval process for Ethereum ETFs has been slower than initially expected. Bloomberg ETF analyst James Seyffart noted on Twitter that these ETFs might start trading later next week or the week of the 15th.

Bitwise and VanEck Filings

Bitwise filed an amended S-1 form ahead of the July 8 deadline, indicating that the products are nearly ready for launch. VanEck then filed its own amended S-1 on Monday. The inability of ETFs to stake has led to new strategies from traditional finance players.

Franklin Templeton’s New Fund

Franklin Templeton, which manages $1.6 trillion in assets, is planning to launch a fund focused on altcoins and staking rewards. Meanwhile, Purpose Investments in Toronto already has an Ethereum fund that’s allowed to stake the underlying ETH.

Excitement About Ethereum

“We’ve always been excited about Ethereum and what the technology and ecosystem represent,” said a spokesperson from Purpose Investments. “Initially, a corporate structure was the best option; now we believe an ETF is the most efficient.”

Staking and ETFs: The Future

The activity around Ethereum staking and ETFs raises questions about the future of the ecosystem. As more institutional players join in and the percentage of staked ETH climbs, the Ethereum community is watching to see how these changes affect the network’s security, decentralization, and overall health.

Insights from Danny Ryan

Danny Ryan, an Ethereum Foundation researcher, shared his thoughts on staking economics at the EthStaker Staking Gathering. “Staking on Ethereum is influenced by reward curves and overall economic incentives built into the protocol,” he said. “The goal is to create a sustainable and secure system that encourages participation and maintains the network’s integrity.”

Market Volatility and Staking Trends

The recent market downturn, attributed to factors like the imminent Mt. Gox repayments and macroeconomic concerns, saw Bitcoin fall below $55,000 again. This volatility highlights the complex relationship between staking trends, ETF anticipation, and broader market forces.

The 27% Staking Milestone

For now, the 27% staking milestone shows the growing belief among ETH holders that staking is the future. Whether this future includes ETFs or new staking-focused funds and companies is still unclear. The crypto world is waiting for the SEC’s final decision, which could be a transformative moment in Ethereum’s history.

VanEck’s Spot Ethereum ETF

In other ETF news, VanEck has officially filed an S-1 for a spot Ethereum ETF with the SEC. This filing is a key step towards potentially launching the first spot Ethereum ETF in the U.S. The proposed VanEck Ethereum ETF would trade on the Cboe BZX Exchange under the ticker symbol “ETHV.”

Fund Performance and Market Rates

The fund’s objective is to reflect the performance of Ethereum’s price, minus expenses. According to Bloomberg ETF analyst Erich Balchunas, this move from VanEck should be followed by similar filings from other issuers, except Bitwise, which has already filed its S-1.

VanEck’s Filing Details

The ETF would hold actual Ethereum and value its shares daily based on the MarketVector Ethereum Benchmark Rate. This index uses prices from what VanEck considers the top five Ethereum trading platforms. The filing states that neither the trust nor any associated parties will engage in Ethereum staking or other yield-generating activities with the fund’s assets. The ETF would initially only allow cash creations and redemptions by authorized participants.

Path to Approval

VanEck’s filing comes as the crypto industry waits for the SEC’s approval of the first spot Ethereum ETF. This ETF could provide more direct exposure to Ethereum’s price movements compared to existing futures-based products. ETF analysts like Nate Geraci estimate that issuers are preparing for a launch in the next few weeks.

Market Manipulation and Investor Protection

The path to approval is still uncertain. To date, the SEC has not approved any spot crypto ETFs, citing concerns around market manipulation and investor protection. The regulator will review VanEck’s application in the coming weeks.

In conclusion, the growing interest in Ethereum staking and the anticipation of spot Ethereum ETFs highlight the evolving landscape of the crypto market. As more institutional players enter the scene and regulatory frameworks take shape, the future of Ethereum and its staking ecosystem will be closely watched by the crypto community.

Ethereum staking ETFs will soon be available in Hong Kong. Within six months, these new crypto products will hit the financial hub, and the city has even more plans for the future.

Launch of Ethereum Staking ETFs

Hong Kong is set to launch Ethereum staking exchange-traded funds (ETFs) in the next six months. After the successful launch of Bitcoin and Ethereum ETFs in April, which were warmly received by the financial sector, the city is eager to offer more crypto products. A Uniswap ETF or Chainlink ETF might follow the Ethereum staking ETFs.

Key Role of HashKey Capital

Vivien Wong, a partner at HashKey Capital, a crypto asset management firm, played a vital role in launching Hong Kong’s spot Bitcoin and Ethereum ETFs. Wong shared that as soon as spot Ethereum ETFs were approved in the US, there was immediate interest in an Ether staking product. The firm has been in talks with the Hong Kong Securities and Futures Commission about the need for an Ether staking ETF. Regulators responded positively, asking for a detailed proposal.

US Spot Ethereum ETFs

Nine spot Ethereum ETFs are expected to launch in the US soon. Ethereum staking ETFs allow users to lock in their Ether holdings and earn a 3% yield, a process called staking. Unlike spot Ethereum ETFs, which give investors easy exposure to Ether through their brokerage accounts, staking ETFs offer the additional benefit of earning yield.

Fees and Launch Timeline

In Hong Kong, holders of these ETF shares must pay a management fee between 0.3% and 0.99%, depending on the fund. According to Wong, launching a new Ethereum staking product will likely take about six months.

Bitcoin ETF Issuers

Here are some key Bitcoin ETF issuers:

1. Blackrock (IBIT) – $18.4 billion AUM, $32.20 price
2. Grayscale (GBTC) – $16.38 billion AUM, $50.15 price
3. Fidelity (FBTC) – $9.53 billion AUM, $49.43 price
4. Ark/21 Shares (ARKB) – $2.62 billion AUM, $56.46 price
5. Bitwise (BITB) – $1.07 billion AUM, $30.80 price
6. VanEck (HODL) – $569.24 million AUM, $63.87 price
7. Valkyrie (BRRR) – $501.52 million AUM, $16.01 price
8. Invesco/Galaxy (BTCO) – $395.5 million AUM, $56.49 price
9. Franklin Templeton (EZBC) – $334.46 million AUM, $32.77 price
10. WisdomTree (BTCW) – $77.31 million AUM, $60.01 price

Hong Kong’s Fintech Ambitions

Hong Kong aims to become a fintech powerhouse by offering innovative products that aren’t yet available in the US. The process of launching these products has been smooth, attracting two types of investors: those who want to “buy and hold” and crypto natives. Crypto natives, in particular, appreciate the ETFs’ design, which allows for timely creation and redemption processes used in over-the-counter trading.

DeFi and Metaverse in Hong Kong

Hong Kong’s finance watchdogs are also focused on DeFi (decentralized finance) and the metaverse. By leading in advanced products, Hong Kong hopes to attract investors from other regions, especially mainland China. Wong hopes that an endorsement from China will open up the market further and bring in more inflows.

Success of Hong Kong’s Crypto ETFs

Since their launch in April, Hong Kong’s crypto ETFs have amassed nearly $260 million in assets. While this may seem small compared to the $14.6 billion brought in by US spot Bitcoin ETFs since January, it’s a significant achievement given Hong Kong’s ETF market size. The excitement around these products is palpable, with financial institutions, wealth managers, distributors, and high-net-worth individuals gradually becoming more comfortable with them.

Overcoming Challenges

Launching these products wasn’t guaranteed. Opinions about crypto had soured in the region due to scandals, such as the fraud case surrounding the Hong Kong crypto exchange JPEX. Despite these challenges, the ETFs have been successful.

Potential for Uniswap and Chainlink ETFs

Wong mentioned that other cryptocurrencies might also get their own ETFs, though the choices aren’t obvious. For Hong Kong regulators to approve new crypto ETFs, the underlying token must be publicly tradable on registered virtual asset trading platforms and be highly liquid. Having a robust use case is also beneficial. ERC-20 tokens, like Chainlink or Uniswap, are generally preferred.

Future of Solana ETF

A Solana ETF might also be in the cards. Wong said they are currently in discussions with the Securities and Futures Commission about launching new products. Hong Kong is eager to expand its offerings and maintain its position as a leader in fintech innovation.

By launching Ethereum staking ETFs and exploring other crypto products, Hong Kong is positioning itself as a major player in the crypto and fintech industries. The financial hub’s efforts are drawing attention from investors globally, and its future looks promising.

$5 Billion in Ethereum ETFs Inflows Could Propel Prices Above $4,000

Eight fund issuers are currently waiting for the U.S. Securities and Exchange Commission (SEC) to give final approval to list and launch exchange-traded funds (ETFs) that will track the spot price of Ethereum (ETH). This could have a significant impact on Ethereum prices.

All About ETH: ETF Flow Predictions and Risks

Ethereum (ETH) has underperformed the broader cryptocurrency market so far this year. In this report, we delve into the factors driving ETH prices and estimate potential net inflows of $3-5 billion into ETH ETFs upon final approval, explaining how this could lead to a price rally for ETH.

Why ETH is Lagging

Despite a broad upswing in crypto prices since 2023, ETH has been a notable laggard. As the second largest cryptocurrency by market capitalization, Ethereum’s market cap was over 50% that of Bitcoin in September 2022. This was just before the shift from Proof of Work to Proof of Stake. Today, that ratio is 33% after a prolonged decline. In contrast, Solana, a Layer 1 competitor, saw its market capitalization grow from 3% to over 20% of Ethereum’s in early 2023.

Factors Behind ETH’s Underperformance

There are three main factors driving ETH’s underperformance:

1. Approval of Spot Bitcoin ETFs: The success of spot Bitcoin ETFs in attracting investor inflows has impacted ETH’s market dynamics.
2. Speculative Activity: A surge in speculative activity led by memecoins has favored Solana over Ethereum.
3. Regulatory Scrutiny: Increased regulatory scrutiny on the Ethereum ecosystem, including its major applications like Uniswap, has affected investor sentiment.

The Case for Spot Bitcoin ETFs

The launch of spot Bitcoin ETFs in January 2024 was a major success. By mid-June 2024, net inflows into these ETFs were just under $15 billion. This includes over $18 billion in net outflows from Grayscale’s Bitcoin Trust (GBTC), which converted to an ETF. The success of Bitcoin ETFs is largely due to Bitcoin being viewed as decentralized digital gold.

Expected Inflows for ETH ETFs

We estimate that spot ETH ETFs will garner $3-5 billion in the first six months of trading. Comparisons with international markets suggest that ETH ETFs could have around 25-30% of the assets under management relative to Bitcoin ETFs. In Sweden, for example, ETH assets are almost 60% of Bitcoin’s, while in Canada, they are about 28%.

The Impact of ETH ETF Approvals

Currently, eight fund issuers have received initial approvals for spot ETH ETFs and are waiting for final approval. Although the timeline has been delayed, an eventual approval is expected. Prediction markets are currently pricing a 73% chance of launch by early July 2024, although this has recently dropped to 2%.

ETH vs. BTC: Market Dynamics

Ethereum has a market capitalization ratio of 33% compared to Bitcoin. From a risk perspective, ETH has a slightly higher volatility ratio compared to BTC. This makes it difficult to argue for significant portfolio diversification benefits beyond an equally-weighted allocation of both assets.

Ethereum’s Use Cases

Unlike Bitcoin, which is seen as digital gold, Ethereum has various use cases and strong on-chain fundamentals. The ratio of daily active addresses on Ethereum versus Bitcoin has consistently exceeded 60%. Additionally, transaction fees paid to use Ethereum are twice those of Bitcoin. Layer 2 scaling solutions have also grown sharply, handling far more transactions than Ethereum’s Layer 1. Most stablecoins are based on Ethereum, further boosting its utility.

Supply Dynamics Favoring ETH

The shift to Proof of Stake has also improved Ethereum’s supply dynamics. The total supply ratio of Ethereum relative to Bitcoin has decreased from 6.3 in summer 2022 to 6.1 today. This reduction in supply is another factor that could boost ETH prices.

Risks and Rewards of an ETH Catch-Up Trade

Given the factors discussed, we estimate net inflows of $3-5 billion into spot ETH ETFs in the first six months. This would mean a total AUM of $13-15 billion for spot ETH ETFs in the US, including the current ETHE AUM. Inflows below $3 billion would be disappointing, while inflows exceeding $5 billion would be a strong positive surprise.

Impact of Memecoins on Ethereum

Memecoins like DOGE and SHIB, which are based on Ethereum, have seen their trading volumes diminish in 2024 in favor of memecoins on Solana, where fees are cheaper. Memecoins briefly surpassed ETH spot trading volumes in March 2024. However, memecoins carry significant risks due to their speculative nature and concentrated ownership structures.

Regulatory Scrutiny on Ethereum

In 2024, the Ethereum ecosystem faced several regulatory actions. Uniswap Labs received a Wells Notice, and Consensys filed a lawsuit against the SEC. Developers of TornadoCash, an anonymizing service, were also targeted. However, recent developments suggest a shift in regulatory stance. The SEC has closed its investigation into Ethereum 2.0, and there is growing support for Ethereum-based stablecoins to hold US Treasuries.

Conclusion

Spot ETH ETFs are likely to begin trading soon, with Ethereum’s market value relative to Bitcoin near multi-year lows. Given the strong on-chain metrics and international ETF comparisons, there is a favorable risk-reward scenario for an ETH catch-up trade in the coming months. A return to the median of the ETH/BTC ratio range from the last three years would imply a 20% rally, while a return to the maximum would mean a 55% rally.

Investment giant Fidelity has updated its application for a spot Ether (ETH) exchange-traded fund (ETF). The new filing shows that FMR Capital, an affiliate of Fidelity, invested $4.7 million to buy 1,250 Ether (ETH). This update was submitted to the United States Securities and Exchange Commission (SEC) on June 21.

Fidelity’s Investment in Ether ETF

Fidelity amended its Form S-1 Registration Statement, required for public sale investments. The new filing reveals that FMR Capital purchased 125,000 shares at $38 each to seed the fund’s basket with $4.7 million, which was used to buy 1,250 Ether. The price of Ether at the time was around $3,506.

No ETH Staking for Fidelity’s ETF

Fidelity also confirmed it will not engage in ETH staking. Staking was removed from the company’s initial proposal on May 21. The filing stated, “The Trust will not participate in the proof-of-stake validation mechanism of the Ethereum network (i.e., the Trust will not ‘stake’ its ether) to earn additional ether or seek other means of generating income from its ether holdings.”

SEC’s Rule Change and Approval Process

The SEC has approved a rule change that allows the listing and trading of eight spot Ether ETFs from major asset managers. These include VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. However, these ETFs still need SEC approval for their S-1 forms before they can start trading.

Analyst Predictions for Ether ETF Filings

Bloomberg analyst Eric Balchunas expects more asset managers to update their Ether ETF filings on June 21. He predicts that the funds will debut on July 2. Balchunas wrote on X, “We will see a bunch of amended S-1s filed today, prob later this afternoon. Then ball’s in SEC’s court to let issuers know about any final changes and effectiveness (aka final approval). We holding the line with July 2nd as our over/under for eth ETFs launch date.”

Bitwise and Pantera Capital’s Involvement

Bitwise has also updated its proposal with the SEC. On June 19, Bitwise included a potential $100 million investment in the ETF from Pantera Capital upon its trading launch.

Hashdex’s Combined Bitcoin and Ether ETF Proposal

Hashdex, another asset manager, is seeking regulatory approval for a combined spot Bitcoin (BTC) and Ether ETF on the Nasdaq exchange. On June 18, Hashdex proposed this idea. Earlier, Hashdex had dropped plans to offer a sole Ether ETF.

Ethereum Options Data and Market Trends

Ethereum options data shows bears’ plan to keep ETH price under $3,600. On June 28, $4 billion worth of Ethereum options are set to expire. The balance of forces is centered around $3,500. Ether’s recent consolidation around this price has diminished the market’s expectation for a monthly options expiry above $4,000.

Monthly ETH Options Expiry

A total of $3.5 billion in monthly ETH options is scheduled to expire on June 28 at Deribit, the leading exchange. This is followed by $286 million at OKX and $142 million at Binance. However, as the SEC continues to review the S-1 filings from ETF providers, the likelihood of bullish bets surpassing $4,000 remains low.

Impact of SEC Chair Gary Gensler’s Confirmation

Ether bulls did not anticipate the delay between the regulatory approval of the spot ETF and its actual trading commencement. SEC Chair Gary Gensler confirmed this uncertainty. This delay has weakened the momentum for optimistic bets for the June 28 options expiry.

Conclusion of SEC Investigation into Ethereum

Ether bears were surprised after a major regulatory concern for investors was addressed on June 19. The SEC concluded its investigation into whether Ether could be classified as a security. This decision means Consensys is no longer under scrutiny for potential ETH sales.

Open Interest for June 28 Options Expiry

The open interest for Deribit’s June 28 monthly options expiry stands at $3.5 billion. However, the actual outcome is expected to be lower. Prices above $4,000 and below $3,000 are seen as unrealistic.

Put-to-Call Ratio and Market Scenarios

The 0.62 put-to-call ratio indicates an imbalance between the $2.2 billion call (buy) open interest and the $1.3 billion put (sell) options. If Ether’s price stays around $3,500 at 8:00 am UTC on June 28, only $257 million worth of these put options will be relevant. This discrepancy happens because the right to sell Ether at $3,300 or $3,400 becomes irrelevant if ETH trades above these levels at expiry.

Bulls’ Target and Potential Gains

Below are the four most likely scenarios based on current price trends. The balance of potential gains for each side is outlined as follows:

• Between $3,200 and $3,400: There are 13,000 calls versus 97,200 puts. The net result favors the put options by $280 million.
• Between $3,400 and $3,600: There are 43,900 calls versus 41,600 puts. The outcome is approximately balanced between call and put options.
• Between $3,600 and $3,800: There are 104,200 calls versus 24,400 puts. The net result favors the call options by $300 million.
• Between $3,800 and $3,900: There are 141,600 calls versus 9,600 puts. The advantage for call options increases to $500 million.

This rough calculation assumes that call options are used primarily for bullish bets and put options for neutral-to-bearish positions. However, this simplification does not account for more intricate investment strategies.

Unless there is an unexpected approval of a spot ETF before June 28, the likelihood supports a balanced result around $3,500. This should be viewed as a victory for the bears, especially considering that Ether was trading above $3,800 just two weeks prior.

Tornado Cash Developer Sentenced to Prison for Writing Privacy Software

On May 14, Alexey Pertsev, a lead developer of Tornado Cash (TC), was found guilty of money laundering by a Dutch court. He was sentenced to sixty-four months in prison. Tornado Cash is a privacy-preserving protocol for the Ethereum blockchain. It allows users to deposit funds and withdraw them to different addresses, making it hard for others to track financial activity. Since TC is noncustodial, users control their own money, and developers like Pertsev can’t control how people use the TC smart contracts.

Why Tornado Cash Was Targeted

Because of its privacy features, Tornado Cash was sanctioned by the Office of Foreign Assets Control (OFAC) in August 2022. The U.S. government banned its use by U.S. citizens, citing money laundering and terrorist financing concerns. Shortly after, Pertsev was arrested in the Netherlands. Roman Storm and Roman Semenov, other lead developers of TC, were also arrested by U.S. authorities in August 2023 for money laundering and sanctions violations.

Impact of Pertsev’s Sentence

Pertsev’s sentence sets a dangerous precedent. It threatens developers’ freedom to write open-source code and users’ ability to transact privately. The judge claimed Pertsev was guilty because TC can be used by others for money laundering. This ruling implies that any privacy-preserving software, like Tor or Signal, could lead to similar charges against their developers.

Privacy-Preserving Financial Tools

The court argued that it is common knowledge that privacy-preserving financial tools can be exploited by criminals. However, this logic is flawed. Just because cars can be used recklessly doesn’t mean car manufacturers are responsible for accidents. Similarly, Pertsev shouldn’t be punished for how others use his software.

The judge also suggested that Pertsev should have made the software more compliant with the law. However, TC allows users to prove their funds are from legal activities and prevents deposits from known sanctioned addresses. Even so, technically savvy users can bypass these measures and interact directly with the smart contract, which the court said made Pertsev’s situation worse.

Government Control and Financial Surveillance

Regulators want developers to create software that the government approves of. This control over software development is a threat to free speech. The government’s actions against TC resemble historical instances where authorities punished creators for their work. For example, the Inquisition punished intellectuals for writing books that challenged the Church, and Nazis destroyed art they deemed “degenerate.”

Today, Western governments jail people for writing software they don’t like. Open-source software boosts freedom and helps people avoid financial surveillance, which threatens government control.

The Role of FATF

The sentence against Pertsev also mentioned the Financial Action Task Force (FATF). FATF is an international organization that sets standards to prevent illegal activities like money laundering. Countries must follow FATF’s recommendations or face sanctions. These recommendations often push for more financial surveillance, treating all transactions as suspicious by default.

If financial privacy is seen as a risk, writing privacy-preserving software is viewed as a threat to regulatory control. This is why the definition of “money laundering” is being expanded to include developers like Pertsev, who merely wrote software that others can use independently.

The Importance of Privacy-Preserving Software

The theory of the division of powers states that the executive, legislative, and judiciary branches must be separate to ensure checks and balances. However, Pertsev’s sentence shows that the judiciary can end up enforcing the will of the other branches. The Bank Secrecy Act, which established most anti-money laundering laws in 1970, came just before the fiat monetary system began.

In a fiat system, money’s value depends on public trust in political institutions. To maintain this trust, governments need to prevent people from opting out of the system. Without financial surveillance, the current fiat system might collapse. Pertsev’s arrest aims to make an example of him and scare people away from using privacy-preserving software.

Supporting Privacy and Open-Source Development

Governments fear privacy because a privacy-conscious population can challenge their power. The best response to this is to continue using and supporting privacy-preserving software. Liberty should never be taken for granted. It must be protected by supporting developers who create privacy tools and by using these tools to maintain financial privacy without government permission.

The fight for privacy is crucial. We must support open-source developers and continue to use privacy-preserving software to protect our freedom. Alexey Pertsev’s case is a reminder that the battle for financial privacy and freedom is ongoing.

Spot Ethereum ETFs Poised for $4 Billion Inflow

Introduction to Ethereum ETFs

Experts anticipate a significant investment of between $3.1 billion and $4.8 billion in Ethereum spot ETFs soon after their launch. The U.S. Securities and Exchange Commission (SEC) has recently approved these ETFs, marking a significant step in cryptocurrency regulation. This approval is expected to draw a larger pool of investors to the market.

The Growing Interest in Ethereum Investments

Institutional investors are showing a growing interest in Ethereum, similar to the early days of Bitcoin ETFs. Just as Bitcoin ETFs attracted massive investments, Ethereum ETFs are also expected to bring stability and growth over the long term. Currently, Ethereum makes up 28% of the global assets under management in the cryptocurrency sector, establishing it as a major player in the market.

Ethereum’s Institutional Appeal

According to research by K33 Research, the influx of money into Ethereum ETFs in the first five months could be substantial. They predict an acquisition of 750,000 to 1 million ETH, which would account for about 0.65% to 0.85% of all Ethereum currently available. This influx highlights the increasing role of institutional funds in the cryptocurrency market, managing around 3.3% of ETH’s circulating supply.

Comparison with Bitcoin’s Success

Ethereum ETFs are setting up to mirror the success seen with Bitcoin spot ETFs, which have accumulated about $13.9 billion since their inception. Ethereum’s spot ETFs are expected to draw in around $4 billion shortly after they start. This is in stark contrast to the modest reception that Ethereum futures ETFs received under less favorable market conditions.

SEC’s Role in Boosting Ethereum ETFs

The SEC’s recent approval is a game-changer for Ethereum ETFs. It not only adds credibility to Ethereum as the second-largest digital asset but also makes it easier and more regulated for investors to enter the market. This is likely to boost investor confidence and encourage more people to invest in Ethereum ETFs.

Market Implications of Ethereum ETFs

The entry of these ETFs is predicted to have a profound impact on the market. They are expected to bring in large amounts of capital and introduce long-term investment strategies, which are essential for the maturity of the asset class. Additionally, advancements in technology like roll-up technology and Ethereum Improvement Proposal (EIP) 4844 are improving Ethereum’s scalability and network resilience, making it even more attractive to investors.

Technological Enhancements and Future Prospects

Ethereum continues to advance with new technologies that make the network more efficient. These improvements are crucial for handling more transactions and accommodating more users as the network grows. With the structure of ETFs, Ethereum is not just a cryptocurrency but a promising financial asset that offers a regulated way for investors to get involved.

Ethereum ETFs and Institutional Investors

Institutional investors play a pivotal role in the stability and growth of Ethereum. By bringing substantial capital and a strategic approach to their investments, these investors help in maturing the market. Their involvement signifies a shift towards more stable and long-term growth in the cryptocurrency sector.

Looking Ahead: The Bright Future of Ethereum

The excitement around Ethereum is palpable, similar to the enthusiasm seen with Bitcoin ETFs, which saw an impressive $58 billion come in within just five months of their launch. If Ethereum spot ETFs follow a similar path, they could push Ethereum to new heights. This would not only bolster Ethereum’s market position but also help stabilize and grow the broader market.

Get Ready for Ethereum’s Rise

As Ethereum ETFs prepare to launch, the anticipation among investors and market watchers is high. With a robust framework in place and the backing of institutional investors, Ethereum is on the path to achieving remarkable growth and stability. Stay tuned as we continue to follow this exciting development in the world of cryptocurrency.

BlackRock Updates S-1 Filing

BlackRock, a major asset management firm, recently updated its S-1 filing with the U.S. Securities and Exchange Commission (SEC). This update shows significant progress toward launching a spot Ethereum (ETH) exchange-traded fund (ETF). This news has excited the crypto community and experts who see this as a big step forward.

Industry Experts Predict July Launch

Many industry experts are predicting that Ethereum ETFs could launch as early as July. These experts believe the updates in BlackRock’s S-1 filing are crucial for moving forward. This filing update aligns with similar moves by other asset managers like VanEck.

BlackRock’s Stance on Staking Activities

In the updated document, BlackRock clearly states that the Trust will not engage in any “Staking Activities.” This means it will not use its ETH for Ethereum proof-of-stake (PoS) validation or generate income from such actions. As a result, the Trust will not receive any staking rewards or earnings from these activities.

This is an important point because not participating in staking could cause an investment in the Shares to deviate from what would have been obtained by purchasing and holding ETH directly. BlackRock’s stance mirrors VanEck’s recent S-1 filing update, which also clarified that none of its affiliated parties would participate in staking activities.

DTCC Lists Fidelity’s Spot Ethereum ETF

In another development, the Depository Trust & Clearing Corporation (DTCC) has listed Fidelity’s spot Ethereum ETF on its website under the ticker FETH. This listing adds another layer of legitimacy and anticipation for these ETFs. However, the official launch still depends on the SEC’s approval of the S-1 forms.

Expert Insights on Launch Timelines

Industry experts have shared their insights on when these Ethereum ETFs might launch. James Seyffart, an ETF analyst at Bloomberg, is optimistic. He stated that the SEC and issuers are actively working towards the launch of spot Ethereum ETFs. He noted that the current engagement on the S-1 filings suggests a launch could happen within weeks.

Eric Balchunas, another ETF analyst at Bloomberg, agrees. He suggested that while an end-of-June launch is possible, a more conservative estimate would be July 4. He also mentioned that an accelerated approval is unlikely unless there is a significant political push to speed up the process.

BlackRock Moves Closer to Launching First Spot Ethereum ETF

BlackRock’s amended S-1 form for its spot ether ETF reveals that a “Seed Capital Investor” purchased the initial shares. This is seen as a positive sign by Bloomberg analyst Eric Balchunas, who predicts a potential June launch. The updated filing stated that on May 21, 2024, the Seed Capital Investor purchased 400,000 Shares at a price of $25.00 each. The net asset value of the Trust was $10,000,000. Pending regulatory approval, the assets within the ETF can be redeemed for either cash or ether.

Comparing VanEck’s S-1 Update

VanEck, another prominent asset management company, has also updated its S-1 filing. This update came right after the SEC’s preliminary approval for multiple spot Ethereum ETFs. VanEck clarified that none of its affiliated parties would participate in “Staking Activities.” This filing specifies that these entities will not use any portion of the Trust’s ETH to generate staking rewards.

VanEck also launched an advertisement shortly after the SEC’s announcement. This 37-second video emphasizes Ethereum’s potential and questions its role in creating a less centralized, open-source economy. The ad resonated well with the crypto community, gathering nearly 440,000 views within 12 hours of its release.

SEC Approval and Future Steps

Despite these positive developments, the official launch of these ETFs remains uncertain. The SEC approved the 19-4b filings for several potential spot Ethereum ETF issuers, including VanEck, BlackRock, Fidelity, Grayscale, and others. However, issuers still need to secure approval for their S-1 forms to officially launch these ETFs.

Industry experts speculate on the timeline for S-1 approvals and the subsequent launch of spot Ethereum ETFs. Nate Geraci, President of ETF Store, suggested that the SEC might “slow play S-1s.” James Seyffart, an ETF analyst at Bloomberg Intelligence, predicted it could take weeks or more to finalize the S-1 approvals and launch the ETFs.

As we reported earlier that discussions between SEC staff and issuers regarding S-1 forms have started, but there is still “work to do” before these forms are approved. It remains to be seen if other potential spot Ethereum ETFs will make the same move as VanEck.

Impact on the Financial and Crypto Markets

As these developments unfold, the financial and crypto communities are closely watching. The coordinated efforts of major asset managers and the SEC’s engagement indicate a pivotal moment for Ethereum investment vehicles. The launch of these ETFs is expected to have a significant impact on the market, offering more opportunities for investors and boosting the overall crypto market sentiment.

BlackRock has already seen success with its Bitcoin ETF, iShares Bitcoin Trust, which has become the world’s largest publicly traded bitcoin fund. The potential launch of their Ethereum ETF could replicate this success in the Ethereum market, attracting more mainstream investors to cryptocurrency.

BlackRock’s updated S-1 filing and the anticipation of the first spot Ethereum ETF launch mark a significant development in the crypto investment landscape. With industry experts predicting a potential launch by July, the financial world is eager to see how these ETFs will shape the future of Ethereum investments.

US SEC Approves Exchange Applications to List Spot Ether ETFs

Background of Approval

On May 23, the U.S. Securities and Exchange Commission (SEC) approved applications from Nasdaq, CBOE, and NYSE to list exchange-traded funds (ETFs) tied to the price of ether. This decision is a big win for the cryptocurrency industry, which had expected the SEC to reject the filings.

Major Surprise for the Crypto Industry

Thursday’s approval was unexpected. Until Monday, most thought the SEC would reject the applications. Nine issuers, including VanEck, ARK Investments, and BlackRock, hope to launch these ether ETFs. Earlier this year, the SEC approved Bitcoin ETFs, setting a precedent for crypto ETFs.

The Road to Approval

The SEC’s decision was a significant step. It showed that the agency is becoming more open to crypto products. Andrew Jacobson, VP and head of legal at 21Shares, said this is “an exciting moment for the industry.” However, ETF issuers still need to get final approval for their registration statements before trading can start.

SEC’s Concerns and Requirements

The SEC’s main concerns were preventing fraud and market manipulation. They emphasized the importance of surveillance-sharing agreements with the Chicago Mercantile Exchange (CME). These agreements help detect and deter fraud in the market. Although the CME does not monitor spot ether markets, it does track futures contracts. The high correlation between futures and spot prices means that manipulation in the spot market would likely affect futures as well.

To address these concerns, exchanges submitted correlation analyses. They showed that price movements in the CME ether futures market closely align with those in the spot ether markets. This analysis helped prove that the CME’s monitoring could detect fraud in the spot markets.

Investor Protection and Market Integrity

The SEC also focused on protecting investors and maintaining market integrity. They looked at several key requirements, including:

• Pricing Information: Ensuring the availability of quotation and last-sale information for each ETF through major market data vendors.
• Transparency: Requiring ETFs to regularly disclose their portfolio holdings, including the amount of ether and any cash or cash equivalents.
• Surveillance Procedures: Implementing surveillance-sharing agreements with other regulated markets to detect and deter fraud.

Market Participants’ Reactions

Many in the cryptocurrency industry were surprised by the SEC’s approval. Market participants had been preparing for a rejection. SEC officials asked the exchanges to quickly fine-tune their filings, leading to a rush to complete weeks of work in just days. It is still unclear why the SEC changed its stance.

Timeline for Trading

While the SEC has approved the rule change to list these new products, issuers still need to get approval for their ETF registration statements. These statements detail investor disclosures. Unlike the exchange filings, there is no set time frame for the SEC to decide on these statements. Some industry participants believe it could take months.

The Impact of Bitcoin ETFs

The approval of spot Bitcoin ETFs earlier this year set a precedent. The SEC had rejected Bitcoin ETFs for over a decade due to concerns about market manipulation. However, Grayscale Investments won a court challenge last year, forcing the SEC to approve Bitcoin ETFs. This decision paved the way for ether ETFs.

Sui Chung, CEO of CF Benchmarks, noted that ether is more complex than Bitcoin. This complexity could slow the SEC’s review process. However, since Bitcoin ETFs offer an established template, the SEC might not delay too much.

Mainstream Finance and Crypto Integration

The approval of spot ether ETFs is another boost for the cryptocurrency industry’s push into mainstream finance. This week, the UK regulator also approved listed cryptocurrency products. The U.S. House of Representatives passed a bill seeking to provide regulatory clarity for cryptocurrencies. This bill, which still needs to pass the Senate, has strong bipartisan support, marking a significant endorsement for the industry.

What’s next?

The SEC’s approval of spot ether ETFs is a major milestone for the cryptocurrency industry. While there are still hurdles to clear before trading can begin, this decision signals a growing acceptance of crypto products in mainstream finance. With the SEC’s focus on preventing fraud and protecting investors, the future of crypto ETFs looks promising.