Ethereum Likely Headed for a Breakout To $5k
In a move that has caught the cryptocurrency world off guard, the US Securities and Exchange Commission approved the first Ethereum ETFs. This landmark decision, anticipated to propel Ethereum’s value to new heights, has left the market relatively unchanged. As of 05:41 UTC, Ethereum was trading at $3743.18, reflecting a slight decline of 0.66% over the past 24 hours. This muted response has sparked various theories among analysts and investors alike.
Market Reaction and Analyst Perspectives
The initial market reaction to the SEC’s decision was unexpectedly subdued. Leading up to the approval, speculation was rife that Ethereum’s price would surge, mirroring the bullish response Bitcoin experienced following its ETF approval earlier in the year. However, the reality has been starkly different.
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Lackluster Approval
Jake Chervinsky, a prominent blockchain investor, shared his insights on X, suggesting that the SEC’s approval process was lackluster.
The ETH ETF approval is short.
The futures / spot correlation data is very strong. SEC says ~ “our hands are tied.”
No direct mention of ETH’s non-security status, but it’s clear: “commodity-based trust shares.”
Explicitly avoids staking. Fight for another day.
Great week 🇺🇸 https://t.co/ix3u6nKqjr
— Jake Chervinsky (@jchervinsky) May 23, 2024
He noted that the approval came with robust futures/spot correlation data, yet the SEC’s statement seemed restrained, stating, “Our hands are tied.” Chervinsky highlighted the absence of any direct mention of Ethereum’s status as a non-security. However, “commodity-based trust shares” were used, and the decision conspicuously avoided addressing staking.
Chervinsky further speculated that the SEC might take a cautious approach with S-1 filings, the detailed registration documents required to sell new securities. “They could go slow on the S-1s, but I don’t think they can drag it out forever. I think this is just what winning is like,” he remarked, implying that while the current situation might seem underwhelming, it is a step towards a broader acceptance of Ethereum in traditional financial markets.
The Procedural Aspect
Gabriel Shapiro of MetaLex Labs offered a different angle, focusing on the procedural aspects of the approval. He pointed out that only the 19b-4 applications were approved, not the more comprehensive S-1 filings.
alpha on why ETH isn’t mooning:
–>only 19b-4s approved, not S-1s
–>approval was by division of trading/markets on ‘delegated authority’
–>means a commissioner can challenge in next 10 days (also means they are trying to hide the vote b/c it’s political)what’s really going…
— _gabrielShapir0 (@lex_node) May 23, 2024
The SEC’s Division of Trading and Markets granted the approval under “delegated authority,” which means a commissioner could still challenge it within the next ten days. Shapiro suggested this approach might be an attempt to obscure the political nature of the decision.
A Political Move
Shapiro also touched on the potential political motivations behind the approval, linking it to a broader strategy involving ESG (Environmental, Social, and Governance) regulations. He suggested that the approval might be part of a “horse trade” to advance ESG rules before a potential political shift that could see former President Trump challenge these regulations if re-elected. “Expect S-1s will not get approved anytime soon, but we’ll see,” he added, indicating a cautious outlook on further immediate advancements.
Ethereum Has a Bright Future Ahead
Despite the initial lackluster response, there are indications that Ethereum’s fortunes could soon change. Key market players have already started positioning themselves for the anticipated rise. BlackRock’s Spot Ethereum ETF has been listed on the DTCC under the ticker $ETHA.
BlackRock’s spot Ethereum ETF has been listed on the Depository Trust and Clearing Corporation (DTCC) with the ticker symbol $ETHA. The listing follows the US Securities and Exchange Commission’s (SEC) approval of eight spot Ethereum exchange-traded funds (ETFs)
— The Number Story (@the_numberstory) May 24, 2024
This development is significant because Ethereum, being a deflationary asset, could see a substantial price increase as investors begin to acquire it in larger volumes.
Ethereum’s Deflationary Nature
Historically, the approval of Bitcoin ETFs in January triggered a significant rally, and many believe Ethereum could follow a similar trajectory. The deflationary nature of Ethereum, combined with increased investor interest and the eventual clearing of regulatory hurdles, sets the stage for a potential price surge.
While the immediate market reaction to the SEC’s approval of Ethereum ETFs has been unexpectedly muted, the long-term prospects remain bullish. The cautious approach of the SEC and the strategic moves by major financial institutions suggest that Ethereum’s time to shine might still be on the horizon.
Related: Ethereum Whales Signal Confidence Despite Slight Market Retracement
Ethereum Consolidating after ETFs Approval
Source:
Source: TradingView
Ethereum has entered a consolidation phase after a price rally days to the ETF. Ethereum is trading in a narrow range between the $3772.6 resistance and $3727.6 support. This narrow trading range is an indicator that a breakout could be underway.
If bulls take control and push Ethereum higher, the first target to watch will be the $4062.0 monthly resistance. On the other hand, if bears take control and breach the $3727.6 support, Ethereum could test $3200, a critical weekly support level.
Read More: Analyst Forecasts Ethereum’s Market Cap to Exceed Bitcoin’s Following ETH ETF Approval
Ethereum Likely to Breach $4k Soon
With the approval of the ETFs and market players like BlackRock already getting into action, the odds are high that Ethereum will break out bullish. The odds of testing $4k today are high as buying volumes rise.
Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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