In a series of eventful events, spot expectations for an Ethereum ETF seemed to spike out of nowhere. On the afternoon of May 20, Bloomberg ETF analyst Eric Balchunas posted on X, noting that he was raising his odds of a spot Ethereum ETF being approved from 25% to 75% after “heard talk this afternoon that the SEC is 180% likely to approve.” Ethereum prices soared almost instantly, going from under $3,100 to over $3,800 in less than 24 hours.
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Balchunas believes there's a solid chance the ETFs will be at least partially approved by Thursday, the final day for VanEck ETF applications. Balchunas said there's a chance the SEC will approve the 19b-4 filings that would allow the ETFs to go public. However, the ETFs would also need S-1 approval, a detailed registration document for each ETF. Balchunas said the move would allow the ETFs to begin operations while still allowing the SEC time to conduct due diligence on each ETF's application before making a final decision.
However, Mr. Balchunas only has one opinion. He is a knowledgeable insider and likely has true information to back up his stance, but consider what others are thinking about the possibility of an ETH ETF coming into existence this week. That's also important.
Polymarket is a unique application for cryptocurrencies. The site allows anyone to bet on the outcome of an event using cryptocurrency. Events have a “Yes or No” outcome, and users can bet on either “Yes” or “No”. The potential payout is proportional to the assumed probability of the outcome. So, if most market participants believe that an event is likely to occur, the payout for a “Yes” bet will be much lower than for a “No” bet. This works similarly to sports betting: events that are less likely to win pay higher rewards, and the payouts change as bettors make their choices.
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The site hosts a variety of events you can bet on, including the next presidential election, Elon Musk's multiple tweets over the course of a week, and how many consecutive weeks a Taylor Swift album will stay at No. 1.
The site has attracted hundreds of millions of dollars in bets, including bets on whether an Ethereum ETF would be approved by May 31. Before the Balchunas news broke, the site estimated there was a 10% chance the ETF would be approved by May 31. But within hours, that probability skyrocketed to nearly 75%. The current probability is around 70%, offering bettors a nearly 50% return if the event occurs. Meanwhile, betting that the ETF will not be approved could net them a return of over 200%.
The rules for this bet state: “Resolved “Yes'' if Spot Ethereum ETF receives approval from the SEC by 11:59:59 PM ET on May 31, 2024. “If this is the case, this market is resolved as “no.'''' ” As mentioned above, this wording is somewhat unclear, as the authorization may not be as clear as specified in the regulations. Either way, this bet is very interesting to watch as it provides insight into how retailers and other market participants are gauging the ETH ETF's potential by the end of the week.
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The article Will an Ethereum ETF Be Approved on Thursday? Here's What This Crypto Prediction Market Can Tell You originally appeared on benzinga.com
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