ethereum is falling after hitting highs over the weekend. Taking the price action into account, the coin is up about 5% from last week's lows but is still trending below the important resistance at $3,700.
Although eth holders and traders are optimistic, prices must close decisively above this liquidation level, paving the way for further gains in the short and medium term.
Will Prices Plunge After ethereum Spot ETF Starts Trading?
The reason for optimism follows the US Securities and Exchange Commission's (SEC) rapid move to approve the first spot ethereum exchange-traded fund (ETF) in the country.
Following encouraging developments in May, in which the agency approved all 19b-4 forms, the product could go live and accessible to investors and institutions within two weeks.
While there are concerns that the approval of the ethereum spot ETF could lead to another wave of lower lows, as seen with the bitcoin spot ETF in January, one analyst is stepping in to reassure holders.
Taking x, the analyst x.com/DaanCrypto/status/1801914011241353484″ target=”_blank” rel=”noopener nofollow”>he pointed that the potential impact of Grayscale selling its ethereum (ETHE) holdings once the spot ETFs go live would be minimal, providing stability and confidence in the market.
This preview refers to the current situation of eth and the broader ethereum ecosystem. The market was not prepared for the US SEC to accelerate the approval of the product this year.
In the case of bitcoin, prices have risen sharply since mid-October as markets anticipated the spot ETF to go live in January. Once launched, it became a “sell the news” event, which briefly drove prices down.
Meanwhile, ethereum prices are declining after sharp gains recorded on May 20, when news of the US SEC's efforts reached the community.
Eyes set on grayscale and ETHE discount
At the same time, the analyst noted that unlike Grayscale's GBTC before the approval of spot ETFs, the discount on ETHE is narrow and within the range of 1-3%. Currently grayscale crypto-products/grayscale-ethereum-trust” target=”_blank” rel=”noopener nofollow”>manages over $10 billion of ETHE.
The small discount means that traders who bought ETHE at the discount have had enough time to sell at a price close to the market price. As such, it means that even once a spot ethereum ETF goes live, selling pressure would be minimal.
Still, only time will tell if eth will soar or fall in the next two weeks. From a regulatory perspective, the clarity gained after the ethereum spot ETF is published could generate demand, allowing more institutions to gain exposure. k33 analysts eth-to-be-absorbed-by-the-etfs?product=pro&checkout=success” target=”_blank” rel=”noopener nofollow”>predict The product will attract between $3.1 billion and $4.8 billion in net inflows during the first five months of marketing.
Featured image from Canva, TradingView chart
