Ethereum could surge 70% if its own ETF gets approved in May, Standard Chartered says

• Ethereum could reach $4,000 ahead of a likely spot ETF approval in May, Standard Chartered wrote.
• The SEC will probably handle the funds' approval similarly to how the bitcoin spot ETF was approached.
• But unlike bitcoin, ethereum is less at risk of price downside after the ETFs' launch.

Ethereum's price could hit $4,000 before late May, if the token is able to secure its own spot exchange traded fund, Standard Chartered said on Tuesday.

Head of FX Research Geoff Kendrick wrote in a note that this will likely happen, marking a 70% price upside from ethereum's current value. 

"We expect pending applications for ETH US spot ETFs to be approved on 23 May, the final deadline for the first of the ETFs under consideration — the equivalent date to 10 January for BTC ETFs," he said.

Kendrick forecasts that the process will look similar to how the Securities and Exchange Commission handled the recent bitcoin spot ETF applications, which eventually led to the launch of 11 funds after months of regulatory pushback.

In theory, ethereum should follow bitcoin's performance in the run-up to the ETFs' approval. Originally, SEC delays first caused bitcoin to flatline, before Grayscale's court victory against the regulator sent the apex token rallying at the end of 2023. 

Ethereum has already risen around 19% since Blackrock filed for an ETF on November 16. But that's a modest gain compared to what Kendrick says could happen in May, the final deadline date for VanEck and Ark21Shares' applications.

Still, to reach the $4,000 price target, some conditions will have to be met.

Expectations for the approval will have to be low, as happened ahead of the bitcoin ETF launch, Kendrick said. Market-side implications for an approval will also have to miss the mark — though some may worry that the SEC's stance that ethereum should be treated as a security could get in the way, the commission has already lost that argument in court, Kendrick outlined.

Finally, a number of ETFs must be approved at the May deadline for ethereum to enjoy a boost. 

While the crypto's pre-ETF price action should resemble that of bitcoin, it's a different story once the funds are active. 

Though bitcoin jumped to an intra-day high of $49,000 on the ETFs' approval, it has since slid 6.7%. The surprising downside stems from massive outflows from Grayscale's fund, which previously functioned as a bitcoin trust.

But the Grayscale Ethereum Trust accounts for a much smaller market cap of the crypto than the bitcoin fund did. 

"Grayscale ETH Trust's current market cap of USD 6bn is 2.2% of total ETH market cap, whereas the comparable share for BTC was 3.1% at the time of the ETF approval," Kendrick wrote.

And while the failed crypto exchange FTX led the Grayscale bitcoin selloff, its holdings in the Ethereum Trust amount to just 0.05% of the token's market cap.