Key Points
- Ethereum could face a significant downturn if the SEC rejects upcoming spot ETH ETF applications.
- Bitcoin or Solana could potentially benefit from Ethereum’s potential difficulties.
Ethereum may experience a rocky period, with some analysts even predicting a significant downturn.
Crypto analyst James Van Straten suggests that Ethereum could lose further ground against Bitcoin if the SEC rejects spot Ethereum ETF applications due in late May.
Impact of ETF Rejection
The SEC is due to make decisions on various Ethereum ETF filings between late May and August.
Van Straten believes that an ETF rejection could further lower the Ethereum to Bitcoin ratio, causing Ethereum to be worth less in Bitcoin terms due to negative market sentiment and sell pressure.
Currently, Ethereum is issuing more ETH than it burns, making it inflationary, in contrast to Bitcoin’s fixed supply of 21 million coins.
Ethereum’s Inflationary State
Van Straten also pointed out that Ethereum’s inflationary nature and a decrease in transaction fees following the Dencun upgrade have given Bitcoin an advantage in terms of fees.
AMBCrypto’s analysis of Ethereum’s inflationary state using Ultra Sound data revealed that while 4.2K ETH was burned in the past week, 17.6K ETH was issued during the same period.
This means that Ethereum issued four times the amount of tokens it burned last week, a significant increase in supply that could potentially lower Ethereum prices.
Bitcoin maximalist Fred Krueger echoed this sentiment, stating that Ethereum was headed for a downturn after Solana outperformed it with lower fees.
Bloomberg ETF analyst Eric Balchunas also expressed skepticism about the approval of Ethereum ETF filings in May.
If the ETFs are rejected, Ethereum could see a significant drop in price, impacting long-term holders who have not yet taken profits.
The potential benefits for Bitcoin or Solana from Ethereum’s potential difficulties, if the SEC rejects the ETFs, remain to be seen.
