After weeks of pessimism when a couple of top Bloomberg ETF analysts viewed the possibility of the U.S. government approving spot ether ETFs as unlikely, they now see the chances of the new financial instruments being approved as much more likely.

"James Seyffart and I are increasing our odds of spot ether ETF approval to 75% (up from 25%), hearing chatter this afternoon that SEC could be doing a 180 on this (increasingly political issue)," Bloomberg Senior ETF Analyst Eric Balchunas posted to X on Monday 

Seyffart, an ETF analyst at Bloomberg, posted similar commentary to the social media platform. "Things are taking a turn for the better on Spot ethereum ETF approvals this week," he said.

Following Balchunas and Seyffart's posts, ether spiked nearly 16%, according to The Block’s Price Page for the token. Ether had been trading at $3,090 at around 3:13 p.m. ET on Monday before jumping to $3,560 as of 3:35 p.m. ET. 

Conversations between at least one potential issuer of a spot ether ETF and the Securities and Exchange Commission have been progressing, according to a person familiar with the talks who asked to remain anonymous. 

"It appears as though some of the politics of this may have changed rapidly," Balchunas told The Block, adding that crypto appears to be, in general, becoming a more politicized issue ahead of the upcoming presidential election. While he said he can't be completely certain, President Joe Biden's administration may be attempting to appear less obstinate regarding crypto.

Recently, former President Donald Trump has positioned himself as a candidate friendlier to the crypto industry. He has said he'd accept political donations in crypto and dined with buyers of NFTs fashioned in his likeness. Trump is the presumptive Republican presidential nominee that will face Biden in the upcoming election.

A story that could 'go on and on'

"If [spot ether ETFs] are denied that's a story that would just go on and on" considering how much attention spot bitcoin exchange-traded funds have been garnering, said Balchunas.

The Bloomberg analyst added that, similar to Biden potentially vetoing a bill overturning the SEC's move to establish certain accounting standards for firms that custody crypto, a denial of spot ethereum ETFs could possibly add fuel to the idea the current president's administration is anti-crypto. 

Added political pressures surrounding crypto appeared to emerge last Thursday when a piece of pro-crypto legislation passed the U.S. Senate, winning the approval of some leading Democrats in that body. 

The Senate voted 60 to 38 on a resolution to overturn the SEC's Staff Accounting Bulletin 121, which would create specific accounting standards for firms that act as crypto custodians. Several legislators from Biden's party, including Senate Majority Leader Chuck Schumer, D-N.Y., voted in favor of the measure. 

Ethereum ETF deadline looms

The first deadline for a slew of proposed spot ether ETFs is May 23, with VanEck's proposal up first. One factor that could lead to the SEC denying the application is its hesitation in labeling the cryptocurrency.

The question of whether the SEC has jurisdiction over ether has emerged as an important issue in recent weeks as reports surfaced that the agency is subpoenaing companies that deal with the Ethereum Foundation. 

Consensys said the SEC had decided ETH +4.07% is a security in a complaint it lodged against the agency last month.

So far, firms' engagement with the SEC regarding spot ether ETFs has failed to reach the robust levels witnessed when financial institutions held talks with the agency regarding the approval of spot bitcoin ETFs earlier this year, according to a person familiar with the matter.

Wall Street giants like BlackRock and Fidelity launched spot bitcoin ETFs and January. Cumulatively, the new instruments have generated billions of dollars in trading volume with many traditional financial firms purchasing shares in the new funds. 

Bitcoin price also rose

In the wake of ETH's price appearing to rise on the Bloomberg analysts' improved outlook for spot ether ETFs gaining approval, ether liquidations also spiked during the price surge. Within an hour, $34.63 million worth of ether short positions were liquidated, according to data from crypto liquidations tracker CoinGlass.

Beyond ether, the price of other tokens also surged. Bitcoin BTC +0.39% ’s price rose about 4% from $67,027 to around $69,800 after experiencing nearly $30 million in short liquidations in about an hour.