In a move that left analysts scratching their heads, Grayscale Investments, the crypto giant, abruptly withdrew its application for an Ether futures ETF just weeks before the SEC's decision deadline.

This surprise withdrawal came on May 7th, with the Grayscale Ethereum Futures Trust application vanishing before the SEC was set to rule on several spot Ether ETFs from other companies. The proposed ETF would have tracked Ether futures contracts, essentially betting on the future price of Ethereum.

Trojan Horse Theory Fizzles Out?

Some experts, like Bloomberg's James Seyffart, believed Grayscale's application might have been a strategic maneuver. The theory? The futures ETF could act as a "Trojan horse," forcing the SEC's hand and paving the way for a spot Ether ETF – a product directly tied to Ethereum's price.

But Grayscale's unexpected retreat throws a wrench into that plan. The timing is particularly curious, with the SEC deadlines for spot Ether ETF decisions from VanEck, ARK 21Shares, and Hashdex looming large in late May.

Adding to the intrigue, the SEC recently delayed its decision on the Invesco Galaxy spot Ether ETF, pushing it back to July 5th. Speculation is swirling, with some wondering if the SEC pressured Grayscale behind the scenes, prompting the withdrawal.

Fate of Spot Ether ETFs in Limbo

The SEC's stance on spot Ether ETFs remains shrouded in mystery. SEC Chair Gary Gensler acknowledged the applications but offered no clear path forward. This lack of transparency leaves the entire industry on edge.

Grayscale's withdrawal casts a shadow over the fate of other spot Ether ETF applications. While giants like BlackRock and Fidelity are still expected to submit proposals, experts fear the SEC will employ the same delay and rejection tactics seen with spot Bitcoin ETFs in early 2023.

Analyst James Seyffart now expresses skepticism, suggesting these current applications might ultimately be denied. Grayscale's withdrawal may have just signaled the end of the first round in the battle for a U.S. spot Ether ETF.

The bottom line?

If Bitcoin manages to climb above $61,685, a bullish charge could be on the horizon. However, a dip below this threshold could trigger a sell-off, highlighting the delicate balance in Bitcoin's ongoing market dance.