Ether’s price experienced a significant surge of 25% between May 20 and May 21, reaching a nine-week high of $3,840. Despite growing confidence in the approval of a United States-based spot Ether exchange-traded fund (ETF) by the May 23 deadline, the altcoin faced resistance. Traders are now speculating whether the stabilization of around $3,750 suggests that the Ether ETF approval has already been factored into the price.
The pending decision by the U.S. Securities and Exchange Commission (SEC) on the spot ETH ETF is still in play. Analysts have raised their expectations for approval after reports that the SEC reached out to the New York Stock Exchange and the Nasdaq to update their filings for the proposed ETFs. The sudden interest from the regulator is believed to have political motives, as President Joe Biden may want to appeal to cryptocurrency supporters.
However, there has been no official word from the SEC yet. The decision will be made by a panel of five commissioners, two of whom are pro-crypto. On the other hand, one commissioner, Caroline Crenshaw, is known for her criticism of the cryptocurrency sector and concerns about inadequate regulation and the risk of fraud and manipulation.
Investors are looking at Bitcoin’s trajectory after its U.S. spot ETF approval in January to assess the potential impact on Ether’s price. Bitcoin saw a 35% increase in the 50 days following the approval. It’s uncertain whether the demand for Ether ETFs will match the $7.37 billion inflows that Bitcoin experienced in its first 50 days, especially considering the existence of Grayscale’s $28.7 billion Grayscale Bitcoin Trust ETF.
Based on analysts’ 75% probability of approval for spot Ether ETFs, the recent 25% increase in ETH price aligns with Bitcoin’s post-ETF approval trend. However, this doesn’t mean Ether’s price is limited to $3,840, but it suggests that the approval likelihood aligns with market expectations. Similarly, Bitcoin’s rally didn’t stop at a 35% gain but reached a new all-time high of $73,750 two weeks later. However, as time passes, external factors increasingly influence the market.
External factors, such as the performance of the S&P 500 index and WTI prices, played a role in Bitcoin’s performance after its U.S. spot ETF approval. Assuming a similar trajectory for Ether would be oversimplifying the situation.
To understand how professional traders are positioned, it’s helpful to examine the Ether futures market. Data shows that major investors and market makers were not confident in Ether’s performance before May 20, as the annualized premium for leveraged long positions was not over 10%. The jump to a 15% premium indicates a moderate risk appetite among bulls, but it is still lower than the range seen in March.
These derivatives metrics suggest that Ether traders are not overly optimistic or fully pricing in the approval odds of the U.S. spot Ether ETF. This reduces the potential negative impact of a denial for ETH bears, as there is no excessive leverage use among buyers. Ultimately, Ether’s current price does not fully reflect anticipation of approval, indicating potential for further gains.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and make informed decisions when it comes to investments and trading.