Key Points
Coinbase Supports Ethereum ETF Application
Coinbase, a well-known cryptocurrency exchange, has communicated its willingness to back Grayscale’s Ethereum [ETH] ETF application to the U.S SEC. The exchange addressed a memo to Vanessa Countryman, the SEC Secretary, stating that it has complied with the Exchange Act since it became publicly listed.
Coinbase also highlighted that Ethereum’s transition to Proof-of-Stake (PoS) clarifies that it is not a security. The exchange stated, “The market has long understood that ETH is not a security. Senior officials of the Commission have publicly said as much on several occasions over the past six years, and neither the Commission nor its staff has disavowed this position, even after the Merge.”
Role of Coinbase in Bitcoin ETFs
Coinbase served as the primary custodian of the recently approved spot Bitcoin [BTC] ETFs. Therefore, the exchange believes that the commission should not have any issues approving the Ethereum ETFs. Since the Bitcoin ETF approval in January, market participants have been optimistic that Ethereum would follow suit.
The SEC has set May as the potential approval deadline for the Ethereum ETF. This has shifted attention from BTC to ETH. At the time of writing, ETH was trading at $3,000, a 30% increase in the last 30 days. This performance is comparable to Bitcoin’s.
Despite the price hike, it has been suggested that Ethereum’s price could rise even further before the deadline. This expectation is fueled by increased optimism around the project. If this trend continues, buying pressure for Ethereum could intensify, potentially leading to a higher price.
Increased Demand for Ethereum
From an on-chain perspective, the number of addresses with non-zero balances has been on the rise. As of January 1, Ethereum addresses with non-zero balances were 111,673,112. However, data from Glassnode indicates that this number has increased to 115,061,094.
This increase suggests that retail demand for Ethereum is improving. If retail demand continues to grow and institutions join in, Ethereum’s price could surpass $3,500. In terms of the Market Value to Realized Value Ratio (MVRV), we observed an increase.
Data from Santiment shows that Ethereum’s 30-day MVRV ratio was 16.41%. This metric indicates when the market holds large unrealized profits or losses. Therefore, it can signal when a cryptocurrency is close to its local top or when it is time to accumulate.
As the ratio decreases, the cryptocurrency can be considered undervalued. However, the increase in Ethereum’s case suggests that more people might be willing to sell at the current time. This does not necessarily mean that Ethereum’s price action might stall or decrease. While there is a chance for a retracement, the price might also increase due to external factors like the spot Ethereum ETF.
