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  Author: Qin Jin There are two major narratives in the encryption market. First up, Bitcoin. Followed by Ethereum, and Ethereum may explode in 2024. 2024 is the 15th year since Satoshi Nakamoto founded Bitcoin, and it is also a critical year for Bitcoin. Bitcoin spot ETF is launched. The fourth halving cycle is coming. Expectations of the Federal Reserve to cut interest rates are becoming more and more apparent, as well as the impact of the USA election on the Bitcoin market. These historic events will affect the future direction of the encryption market to some extent. I think that the narrative context of various discussions surrounding the encryption market in the next 1-2 years will not leave the keyword Bitcoin, and this narrative context trend will only increase rather than decrease. Similarly, 2024 is the 11th year since Buterin founded Ethereum. It is also a critical year for Ethereum. Bull market cycle. Cancun upgrade. and the upcoming Ethereum ETF. These events will also have a profound impact on the crypto market. As the second largest player in the crypto market, it never lacks topicality. As the crypto ETF that attracts the most attention from the market after Bitcoin, will it explode this year? Briefly write a few sentences about Ethereum ETF. What is the biggest role of ETFs in the crypto market? I think there are three points. The first is compliance. The second is capital inflow. The last step is to get out of the circle. Strictly speaking, the compliance listing of Bitcoin ETF is very successful. No matter which one of the above three, it has been achieved to the extreme. According to the latest data from BitMEX Research, on February 16, the single-day net inflow of spot Bitcoin ETFs reached US$323.9 million. Following the latest inflows, the Bitcoin ETF has now recorded nearly $5 billion in net inflows. This means that more than 100,000 BTC have been transferred into the spot Bitcoin ETF since the launch of the Bitcoin ETF. According to a CryptoQuant report, over the past two weeks, more than 75% of new Bitcoin investments have come from Bitcoin spot ETFs, and investments from these ETFs have increased to 2% of total historical investments in Bitcoin in just one month. Bitcoin reached $52,000 on February 14, a new high in the past two years. Subsequently, the market value also exceeded 1 trillion US dollars. So if we speculate on the future direction of the Ethereum ETF based on the logic of the listing of the Bitcoin ETF, will it perform the same drama as the Bitcoin ETF? The latest forecast given by Standard Chartered Bank is that it will rise to $4,000 before May 23. Today, ARK 21Share and VanEck submitted revised documents to the US SEC for their Ethereum spot ETFs. According to Eric Balchunas, senior ETF analyst at Bloomberg, ARK 21Share submitted a new 19b-4 filing and a series of new analysis notes for its Ethereum spot ETF. Another Bloomberg analyst James Seyffart said that VanEck submitted a revised S-1A document for its spot Ethereum ETF filing. In addition to ARK 21Share and VanEck, Franklin Templeton, BlackRock and Grayscale have also submitted Ethereum spot ETF application documents to the US SEC. So far, analysts including Standard Chartered Bank, JPMorgan Chase and Bloomberg have predicted that the probability of Ethereum ETF being approved in May is more than 50%. If approved, what fundamental changes will it bring to the encryption market and the Ethereum market? The following article from zerohedge about the approval of the Ethereum ETF explains what the structural logic behind the approval of the Ethereum ETF is. and Ethereum price predictions after approval. For readers’ reference: Author: Tyler Durden Standard Chartered Bank: ETH will reach $4,000 in May after Ethereum ETF is approved. A month ago, Standard Chartered Bank predicted that Bitcoin will eventually rise to $200,000 as the Bitcoin ETF is approved. Since then, Standard Chartered has turned its attention to Ethereum and the inevitable Ethereum ETF approval. Although Standard Chartered did not make similar exaggerated predictions, it believes that ETH will rise to $4,000 before May 23, when the Ethereum ETF is expected to be approved. By the way, we agree. How do they get there? As Standard Chartered analyst Geoff Kendrick wrote, the U.S. Securities and Exchange Commission approved 11 spot Bitcoin ETFs on January 10. These approval processes, as well as Bitcoin price movements before and after, provide valuable lessons for the ongoing Ethereum ETF application process. According to Kendrick, the SEC’s dominant strategy for Ethereum ETF applications is to copy Bitcoin’s process. This partly reflects the structural similarities between the two. In its case against Ripple in June 2023, the U.S. Securities and Exchange Commission did not include ETH among the 67 tokens it claimed were "securities." In addition, ETH, like BTC, is a futures contract listed and regulated on the Chicago Mercantile Exchange (CME). Therefore, the bank expects the pending application for the ETH U.S. spot ETF to be approved on May 23, which is also the final deadline for the first batch of ETFs under consideration and is equivalent to the approval date of the Bitcoin ETF on January 10. If ETH prices behave similarly to BTC prices before the Bitcoin ETF was approved, Kendrick expects ETH prices to reach as high as $4,000 by then. To be sure, for ETH prices to follow the same price pattern as BTC, Standard Chartered lists three conditions that need to be met: First, current market expectations for the likelihood of a May 23rd approval date must be low, as is the case with the Bitcoin ETF. This seems to be true. Some media reports indicate that commentators are divided over the likelihood of approval. Expectations of disapproval focus on the idea that the SEC defines ETH as a security rather than a commodity—the argument at the heart of the Ripple incident in 2023. Based on market comments, we believe approval expectations are relatively low, possibly below 50%. Second, the market speculation on the probability of approval must be wrong. We also think this is the case. Although SEC Chairman Gary Gensler did say in the SEC's lawsuit against Ripple in June 2023 that "everything except Bitcoin may be a security," ETH was not included in the 67 tokens that the SEC deemed securities at the time. It’s also worth noting that the SEC didn’t prevail in that case either – Ripple was ruled a security when sold to institutional customers, but not when purchased on an exchange. In addition, the SEC also lost its case against Grayscale regarding the Bitcoin ETF. Grayscale also owns an Ethereum trust fund that it hopes to convert into an ETF, so if the application is rejected, Grayscale will likely appeal again. BTC and ETH are both futures contracts listed and regulated on the CME, and we see no reason for the SEC’s view of ETH to differ from the CME’s view. Third, several spot Ethereum ETFs need to be approved on May 23. In other words, the SEC needs to follow the same process for Bitcoin ETF approval. We think this is very likely. During the Bitcoin ETF approval process, the U.S. Securities and Exchange Commission continued to delay its decision and publicly stated that it would not immediately approve it until it was approved. On January 24, the U.S. Securities and Exchange Commission delayed the approval of two Ethereum ETFs (BlackRock and Fidelity), and on January 25 it delayed the approval of a third Ethereum ETF (Grayscale), while Gensler claimed that the approval of BTC was a one-time event. In fact, we believe that a similar approach by the SEC to the Ethereum ETF is not only possible, but also has the best impact on ETH prices, as it will lower market expectations - as the probability of approval increases, price upside will be maximized. From an ETF approval perspective, Standard Chartered believes that ETH is not vulnerable to the post-approval sell-off of BTC: BTC prices fell from a high of $49,000 on January 11 to a low of $38,500 on January 23. This is because before the ETF was approved, the Grayscale Ethereum Trust accounted for a smaller share of ETH’s overall market capitalization than the Grayscale Bitcoin Trust (GBTC). The relative market cap share of ETH held by FTX relative to BTC, and the associated forced selling pressure, is even smaller. Meanwhile, while GBTC has sold more volume ($4.9 billion) than we expected in recent weeks - recalling our report that the forced liquidation of FTX and its associated entities was one of the main reasons for Bitcoin's poor performance over the past month - selling pressure has eased in recent sessions. Like us, Kendrick also believes that the period of sharp GBTC selloffs is over (even if sporadic large futures liquidations continue). The analyst also expects other new Bitcoin ETFs to continue flowing in, allowing BTC prices to resume their upward trend. Therefore, heading into the expected approval date of May 23rd, we expect ETH price to follow or outperform BTC’s upward trend over comparable periods. Finally, aside from the outcome of the ETF process, there is a fundamental reason to be optimistic about ETH pricing. Standard Chartered reminds us that the “Cancun Upgrade” is imminent and will be tested on the Sepolia and Holesky test networks on January 30 and February 7 respectively. This will allow it to launch on the Ethereum mainnet in late February or early March. This upgrade will mainly enable native forking (proto-danksharding), a process that will significantly reduce the transaction costs of Layer 2 (such as Arbitrum and Optimism), making it consistent with Layer 1 public chains such as Solana. It will also slow down the staking speed of ETH, so at the new maximum speed, 100% staking will theoretically not be achieved until the end of 2028, rather than the end of 2024 before the upgrade. Overall, this upgrade should capture more value in the ETH ecosystem, as lower Layer 2 fees make ETH more competitive, while slower staking speeds should keep staking rewards higher for longer. Both of these points are good for ETH price. 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