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How This Crypto Hedge Fund Will Trade Ethereum ETF Decision – DL News
- SEC Likely Rejects Spot Ethereum ETFs.
- But Ethereum could still grow following the event.
There are just nine days left until the Securities and Exchange Commission must approve or deny spot Ethereum exchange-traded funds.
The outlook is grim. Bloomberg Intelligence ETF analyst Eric Balchunas said this DL News That does not expect approval before the end of 2025. Bettors on Polymarket, meanwhile, put a 14% chance that the ETFs will be approved before May 31.
But the consensus around the SEC’s decision could provide an opportunity for cryptocurrency traders.
“Sell rumors, buy news”
There is a saying in the markets: buy the rumor, sell the news.
It refers to the practice of accumulating an asset – a cryptocurrency or a corporate stock – in the run-up to a scheduled bull event, then dumping it after the announcement.
The launch of Bitcoin spot ETFs is a good example: Bitcoin rose 77% in the three months before approval, but fell 20% immediately after the ETFs were given the green light.
Ethereum ETFs could offer a similar strategy, but in reverse, said Quinn Thompson, founder of crypto hedge fund Lekker Capital DL News.
He suggested that the rejection of Ethereum ETFs could lead to bullish price action.
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“It is clear that positioning and sentiment will be skewed bearish ahead of the event as the consensus leans heavily towards rejection,” Thompson said. “But since everyone is largely on one side of the boat coming in, you should try to fade [the market’s expectations].”
”In these situations, a drastically better upside or worse downside is needed to keep the consensus from evaporating [into the event],” He added.
In other words, rejection is likely already a given and market participants could find themselves caught by surprise if Ethereum were to suddenly push higher.
“My best guess is that this is not an event, as hopefully a probable denial will be incorporated into the market,” said Brian Rudick, senior strategist at cryptocurrency trading firm GSR. DL News.
The warning signs are all there, Rudick said: the SEC’s lack of engagement with potential ETF issuers, Ethereum’s uncertain regulatory status and the agency’s investigation into the Ethereum Foundation.
Thompson, meanwhile, said the SEC’s reasoning behind the expected rejection would likely affect any trading strategy.
“If there was a rejection because of litigation, I would see that bringing the market down a little bit,” he said.
The SEC has until May 23 to decide whether to approve or reject asset manager VanEck’s request to launch a spot ETF on Ethereum.
Drivers of the cryptocurrency market
- Bitcoin is up 1% in the last 24 hours and is trading at $61,835.
- Ethereum advances by 0.3% to $2,918.
What we are reading
Tom Carreras is a markets correspondent at DL News. Do you have a recommendation for Ethereum ETFs? Please contact tcarreras@dlnews.com.