Something unusual must be afoot! Ethereum's surge feels familiar

Public Opinion Shines Bright - It stirs up potential events into a storm, making everyone aware. Initially heating up the momentum and public opinion, even if some people oppose it, they cannot stop the consensus of public opinion. As described in "The Crowd," once a group is formed, individual resistance will be easily drowned out, especially in countries that claim to be free and democratic.

Yesterday, Ethereum surged over 20% to a high of 3700, once again validating the madness of panic-driven crowds, stemming from a well-founded speculation: the spot Ethereum ETF is about to be approved!

Bloomberg analyst Eric Balchunas stated: This afternoon, I heard some rumors that the SEC might make a 180-degree turn on this issue (which is becoming increasingly politicized), so everyone is scrambling to prepare (like us, others also think it will be rejected). He also reiterated that he would set the upper limit of probability at 75% until more evidence is seen, such as application updates.

According to Coindesk, the SEC has requested exchanges to expedite updates on the 19B-4 filing regarding the spot Ethereum ETF. The 19b-4 filing is a document submitted by exchanges, typically related to changes in the rules governing exchange operations, such as introducing new products, modifying trading mechanisms, or other relevant exchange policies.

The familiar pattern is reminiscent of the Bitcoin ETF, where the false news of the Bitcoin ETF's approval sent the crypto community into a frenzy, bringing it from the sidelines to the formal spotlight. Represented by Bitcoin, crypto gained global attention under the limelight, with off-market funds and widespread media coverage directly opening the door to a bull market, pushing crypto's market value to new heights.

Once the Bitcoin ETF was officially confirmed and continued to serve as a bridge between crypto and other financial trading channels, proposals for the Ethereum ETF never stopped. However, the traditional SEC would not satisfy both hopes at once, especially since Ethereum was once deemed a security rather than a commodity. The probability of the Ethereum ETF being approved had dropped below 30% at one point, indicating the impact and disruption this news of potential approval would have on crypto.

What is the reason?

The decentralized institutions seem to have failed to manage consistent communication. The SEC's trading and markets division is responsible for approving the 19b-4 applications, while the finance division handles S-1 applications. On Monday, the SEC's trading and markets division called the exchanges to inform them that they would approve the (spot Ethereum ETF) 19b-4 application, while the S-1 reviewers seemed reluctant to approve it so quickly.

The SEC must approve both 19b-4s and S-1s for the ETF to be legally sold to the public. If the SEC approves the 19b-4s but does not approve the S-1, it means that "the ETF can be listed on the exchange, but the ETF cannot be legally sold to investors."

Why would they approve part of the application content first while internal opinions have not yet been unified?

Perhaps this is a political decision.

With the elections approaching, former President Trump has publicly supported cryptocurrencies over the past month. This former president told a group of people who purchased his NFTs that President Joe Biden does not know what cryptocurrencies are and said, "If you like any form of cryptocurrency, it comes in many different forms. If you support cryptocurrencies, you better vote for Trump."

As a rival, the Biden administration also hopes to gain the votes of young people, and the support of crypto voters has now become a political goal. Winning by having the SEC approve the Ethereum ETF seems to have become a legitimate means.

The influence and role of a leader's opinion in a group have surpassed the truth of the facts. What excites the group, what they like and believe in, has always been those legendary stories, rather than the mundane reality of life.

The Ethereum spot ETF applied for by VanEck will face its final decision moment on May 23, while the Ethereum spot ETFs applied for by Ark and 21 Shares will face their final decision moment on May 24. If the ETH spot ETF is approved, it could further drive up ETH prices, which is the biggest catalyst for ETH and even the entire crypto market moving forward. However, if rejected, ETH may face a correction, but the prospects for the approval of the Ethereum spot ETF have already changed, and the overall future trend remains optimistic.

However, the capital entering through the ETF usually does not care about the consistency of ETH, re-staking yield, decentralization, scalability, or the controversies of low volatility and high FDV. The funds that seek quick returns may have a counterproductive effect, and will the outcome of the Wild West be a chaotic scene? The challenges Ethereum faces may have just begun.