The possibility of an Ethereum ETF getting the green light is looking shaky as market conditions deteriorate. Financial expert Charles Gasparino recently pointed out several risks that might delay or even block the approval. This situation arises as the broader cryptocurrency market, including Bitcoin (BTC) and Ethereum (ETH), shows signs of decline.

The Complex Approval Process and Its Effects

Gasparino explained that getting an Ethereum ETF approved is a two-step process. First, it needs approval from Trading and Markets (T&M) to trade. Then, it requires a green light from either Corporate Finance (Corp Fin) or Investment Management (Inv Mgmt) to issue, depending on the specific issuance type.

A regulatory insider highlighted that only the T&M approval has a strict deadline. Even if T&M gives the go-ahead, there could still be hold-ups with the issuance approval from Corp Fin or IM. Analysts Gautam Chhugani and Mahika Sapra from Bernstein believe that approving a spot Ethereum ETF could boost Ethereum's price by 75%, pushing it to $6,600. They pointed out that when a similar Bitcoin product was approved by the SEC in January, Bitcoin's price soared by 75% in the following weeks, expecting similar results for Ethereum.

Investor Sentiment and Market Movements

As excitement around the Ethereum ETF grows, open interest in ETH futures spiked from $11.25 billion to $14.87 billion within three days, a 24.3% rise. This increase suggests optimism among investors, indicating strong buyer interest. However, Bitcoin and Ethereum have dropped by 0.31% and 2.04% respectively in the past 24 hours.

The crypto greed and fear index, which gauges market sentiment, has risen to 76 from 64 last week. This index tracks emotions in the market, with fear often indicating buying opportunities and greed suggesting a possible correction. Given these conditions, investors might consider waiting for the official ETF approval to avoid sudden market corrections, especially if the SEC rejects the applications, leading to a potential sell-off.

Conclusion

In summary, while the approval of an Ethereum ETF could significantly boost the cryptocurrency's price, the process is fraught with regulatory challenges. Market conditions and investor sentiment are highly volatile, making the situation precarious. Investors should remain cautious and watch for official regulatory decisions before making significant moves.