Ethereum’s price has experienced volatility in Thursday’s trading session following the surprising news that the US Securities and Exchange Commission (SEC) has approved spot Ethereum exchange-traded funds (ETFs). This turn of events has shocked the market, as just a week ago, it was widely believed that Ethereum ETFs would be rejected.
Currently, the Ethereum price is hovering around $3,800, a significant drop from the earlier session’s high of $4,000 but still a notable increase from the session’s low of $3,520.
Throughout the week, rumors began circulating about a potential SEC u-turn, which gained traction on Monday. In the days that followed, there was extensive communication between ETF issuers and the SEC. Traders responded to the speculation by aggressively driving up the price of Ethereum, expecting that ETFs would contribute to the growth of the ecosystem.
The climax came on Thursday when the SEC officially approved eight spot Ethereum ETFs. This approval is particularly significant as it is expected to attract institutional investors to enter the market, just like spot Bitcoin ETF approvals did earlier this year, leading to a surge in Bitcoin’s price.
The Ethereum price could follow a similar trajectory and reach new record highs, currently standing at around $4,900, which is a 28% increase from its current levels. This influx of liquidity into the Ethereum ecosystem is likely to encourage further adoption, activity, and development. Additionally, the introduction of Ethereum ETFs will solidify Ethereum’s position as the leading blockchain for smart contracts.
While the confirmation of spot Ethereum ETF approvals may initially result in some short-term selling pressure, similar to what happened with spot Bitcoin ETFs, it is expected that ETH will soon surpass the $4,000 mark. Some traders prefer to wait for confirmation of a positive market catalyst before taking profits.
Previously, uncertainty surrounding Ethereum’s regulatory status in the US had prompted many traders to short ETH against other cryptocurrencies, as the SEC was considering classifying ETH as a security earlier this year. However, with the approval of spot Ethereum ETFs, it is clear that ETH is recognized as a digital commodity, similar to Bitcoin. This realization may lead to the unwinding of many short positions, providing ongoing support for the market.
From a technical analysis perspective, breaking the downtrend from March to mid-May and surpassing its 21 and 50-day moving averages suggest that ETH is likely to retest its March highs near $4,100. Once this level is breached, a swift push towards the 2021 highs of $4,900 is highly probable.
It’s important to note that cryptocurrency is a high-risk asset class, and this article is intended for informational purposes only and should not be considered investment advice. There is a possibility of losing all invested capital.