Markets
How This Crypto Hedge Fund Will Trade Ethereum ETF Decision – DL News
- The SEC will likely reject Ethereum spot ETFs.
- But Ethereum could still rise after the event.
The deadline for the Securities and Exchange Commission to approve or deny spot Ethereum exchange-traded funds is just nine days.
The outlook is bleak. Bloomberg Intelligence ETF analyst Eric Balchunas said DL News what he doesn’t wait for approval before the end of 2025. Polymarket bettors, in turn, attribute a 14% chance of ETFs being approved before May 31st.
But the consensus surrounding the SEC’s decision could offer an opportunity for cryptocurrency traders.
“Sell the rumor, buy the news”
There is an expression in the markets: Buy the rumor, sell the news.
It refers to the practice of accumulating an asset – a cryptocurrency or shares of a company – before a scheduled bull event, and dumping it after the announcement.
The launch of Bitcoin spot ETFs is a good example: Bitcoin rose 77% in the three months leading up to approval, but fell 20% immediately after the ETFs were given the green light.
Ethereum ETFs can 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 some bullish price action.
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“It is clear that positioning and sentiment are skewed and pessimistic at the start of the event, given that the consensus is strongly in favor of a rejection,” Thompson said. “But since everyone is largely on one side of the boat getting in, you should try to disappear [the market’s expectations].”
“In these situations, a drastically better advantage or a worse disadvantage is needed to keep the consensus from disappearing. [into the event],” he added.
In other words, the rejection is likely already priced in and market participants could be caught off guard if Ethereum suddenly rises.
“My best guess is that it is a non-event as a likely denial will be incorporated into the market,” said Brian Rudick, senior strategist at crypto 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.
Meanwhile, Thompson said the SEC’s reasoning behind the early rejection would likely affect any trading strategy.
“If there is a rejection due to litigation, I can see it bringing the market down a bit,” he said.
The SEC has until May 23 to decide whether to approve or reject asset manager VanEck’s application to launch a spot Ethereum ETF.
Crypto Market Movers
- Bitcoin is up 1% in the last 24 hours and is trading at $61,835.
- Ethereum rose 0.3% to $2,918.
What are we reading
Tom Carreras is markets correspondent for DL News. Do you have any tips on Ethereum ETFs? Get in touch at tcarreras@dlnews.com.