Reports are surfacing, originally noted by Walter Bloomberg on the X platform, that the United States may be set to deny the introduction of spot Ethereum (ETH) Exchange-Traded Funds (ETFs) as soon as next month. The information is not yet considered definitive nor confirmed by any officials. Nonetheless, the rumors have gained some credibility given the absence of positive signals regarding the approval of an Ethereum ETF.

How important is ETF?

The effect of an ETF on a cryptocurrency can be substantial. When the Bitcoin ETF was launched, it allowed institutional investors to gain exposure to Bitcoin without the complexities of direct ownership. In much less than a year, Bitcoin exchange-traded funds (ETF) have gathered net inflows of roughly $12.1 billion.

However, the dynamics of Ethereum are distinct from those of Bitcoin. Ethereum does not quite match Bitcoin's appeal to institutional investors, with Bitcoin being more similar to a store of value. Hence, the speculation is that the impact of an Ethereum ETF may not have mirrored the Bitcoin scenario. An Ethereum ETF, if it had been approved, may not have sparked the same level of market enthusiasm, given Ethereum’s different use cases and investor base, more like traditional stocks.

Ethereum's price performance

It is obvious the asset is experiencing volatility as the news drops. Ethereum is maneuvering below key levels and has experienced a substantial price drop after traders who anticipated positive ETF news started selling their holdings.

If reports end up being truthful and an Ethereum ETF is indeed off the table for now, the market may enter a broader correction. However, given Ethreum's focus on decentralized applications and finance, the long-term effect of the ETF might be slightly overestimated. Key drivers for Ethereum remain fees from dApp usage, overall crypto market growth and technological advancements.