Key Points
Over the weekend, Ethereum printed higher highs but has since slipped. Despite this, the coin has seen a roughly 5% increase from last week’s lows. However, it’s still trending below the crucial resistance level at $3,700.
Ethereum holders and traders remain optimistic, but for more gains in the short to medium term, prices need to close decisively above this liquidation level.
Impact of Spot Ethereum ETF Trading
The optimism stems from the rapid decision by the SEC to approve the country’s first spot Ethereum ETF. This followed encouraging events in May, when the agency approved all 19b-4 forms. The product could be live and accessible to investors and institutions within two weeks.
There are concerns that the approval of the spot Ethereum ETF could lead to another wave of lower lows, similar to what happened with the spot Bitcoin ETF in January. However, one analyst has stepped in to reassure holders.
The analyst noted that the potential impact of Grayscale selling its Ethereum holdings (ETHE) once spot ETFs go live would be minimal. This provides stability and confidence in the market.
The current state of Ethereum and the broader Ethereum ecosystem were not prepared for the SEC to fast-track the product’s approval this year.
In the case of Bitcoin, prices rose sharply from mid-October as markets anticipated the spot ETF going live in January. After launch, it became a “sell the news” event, briefly pushing down prices.
Ethereum prices are turning lower after significant gains posted on May 20. This was when news of the SEC’s efforts reached the community.
Grayscale and ETHE Discount
The analyst also pointed out that, unlike Grayscale’s GBTC before the approval of spot ETFs, the discount in ETHE is narrow and within the 1-3% range. Grayscale currently manages over $10 billion of ETHE.
Traders who bought ETHE for the discount have had enough time to sell at near market price. This implies that even when a spot Ethereum ETF goes live, selling pressure would be minimal.
Only time will tell whether Ethereum will soar or plunge in the next two weeks. From a regulatory perspective, the clarity that comes after the release of the spot Ethereum ETF could spark demand. This would allow more institutions to gain exposure. K33 analysts forecast that the product will attract between $3.1 billion and $4.8 billion in net inflows within the first five months of trading.
