Key Points
Unexpected Price Behavior for Ethereum
Despite the Securities and Exchange Commission’s (SEC) approval of the Spot Ethereum ETFs, Ethereum’s (ETH) price did not experience a significant rally.
This was surprising considering the approval was anticipated to trigger a massive price surge for the second-largest crypto token.
The lack of a price rally for Ethereum might be due to the crypto token already being priced into the news about a potential approval.
Notably, Ethereum’s price rallied by almost 20% earlier this week when Bloomberg analysts Eric Balchunas and James Seyffart increased their approval odds from 25% to 75%.
This could have resulted in a typical ‘sell the news’ event, with many traders currently taking profits from their earlier Ethereum investments.
NewsBTC reported that Ethereum whales had bought over 110,000 ETH ($341 million) between May 19 and 20 in anticipation of news regarding a potential approval of these funds.
Historically, this behavior could have been expected from Ethereum’s price, considering that Bitcoin (BTC) experienced a significant drawdown following the approval of the Spot Bitcoin ETFs.
Unlike the Bitcoin ETFs, which began trading immediately, these Spot Ethereum ETFs won’t start trading just yet.
The SEC only approved the exchange filings (19b-4s) and will still have to approve the registration filings (S-1s) for these funds to begin trading.
This could be another reason why Ethereum’s price hasn’t reacted positively to this development.
SEC’s View on Ethereum
The approval of the Spot Ethereum ETFs is a clear sign that the SEC doesn’t consider ETH a security, contrary to earlier reports that the Commission might have held this belief for some time now.
TuongVy Le, a General Counsel at Anchorage Digital, noted that funds whose assets are 40% or more securities may not register through a form S-1 but through Form N-1A or N-2.
If the SEC considered Ethereum a security, it would have rejected the S-1 filings made by the various fund issuers like BlackRock since these Ethereum ETFs will hold Ethereum as their major assets.
At the time of writing, Ethereum is trading at around $3,803, according to data from CoinMarketCap.
