Ether has surged, leading a rally in digital assets amid growing speculation that opposition is easing among regulators towards one or more exchange-traded funds that invest directly in the second-biggest cryptocurrency.

Ether rose to about $3 658 as of 7.06am SAST. Bitcoin also extended gains, climbing to $70 875.

The native token of the ethereum blockchain extended gains after Bloomberg Intelligence ETF analyst Eric Balchunas said he and his colleague James Seyffart had increased the estimated probability that a spot-ether ETF gets approved to 75% from 25%.

Traders and analysts on social media “are now speculating that the SEC might be more likely to lean towards potential approval, and traders are now scrambling to put on positions since many had completely written off even the remote possibility of an approval”, said Chris Newhouse, a decentralised finance analyst at Cumberland Labs.

“Massive spikes in volume and demand for both spot and leveraged positions are apparent in the markets and the outperformance in ETH compared to BTC points to the potential ETH ETF catalyst as a primary driver.”

After months of silence, the US Securities and Exchange Commission is poised to announce a decision on at least one application for an ETF that invests directly in ether by 23 May.

Not everyone is convinced

Some fund companies expect a rejection because their private dialogue with the SEC hasn’t been as robust as it had been prior to the approval of spot-bitcoin ETFs in January, Bloomberg reported on Friday, citing two people familiar with the matter, who asked not to be named discussing private conversations.

Despite the rally on Monday, not every trader was convinced that the SEC is warming up to an ether ETF.

“FalconX’s derivatives desk has seen the majority of our counterparties fade the move with the expectation that the SEC will move slower than the markets are anticipating,” said Ravi Doshi, head of markets at FalconX. — David Pan, (c) 2024 Bloomberg LP