Ether surges 17%, Polymarket approval chances rocket as ETF makes regulatory progress

Ether (ETH) opened the Asia business day trading above $3,600, up 17%, as favorable regulatory developments increase the chance that an ether exchange traded fund (ETF) will soon be approved, while the yes sides of various Polymarket contracts also jumped on the news.

The CoinDesk 20, a measure of the performance of the market's largest digital assets, is up almost 8%.

CoinDesk reported towards the close of the U.S. business day Monday that the Securities and Exchange Commission had make abrupt progress in the approval of a Ether ETF by asking exchanges to update 19b-4 filings for ether ETFs.

The SEC asking exchanges to update 19b-4 filings, which propose rule changes, suggests potential progress toward spot Ether ETF approvals. Despite the progress with 19b-4 filings, the SEC could still reject the S-1 registration statement of the ether ETF, delaying its approval and trading commencement.

As a result of this significant development, the ether implied volatility curve, which shows market expectations of future volatility across different strike prices and expirations, flattened as 25-delta risk reversals hit YTD highs above 18%, and traders heavily bought $4000 calls for 24 May 2024 and 31 May, Presto Research analysts wrote in a note shared with CoinDesk.

A Polymarket contract asking if an ether ETF would be approved by May 31 jumped from 10 cents to 55 cents, representing a 55% chance that approval will take place by May 31.

Another Polymarket contract asking if the ETF will be approved by June 30 is currently trading at 68%.

A decision on VanEck's proposed ether ETF is due on May 23, followed by Ark's on May 24.