ethereum price was in a consolidation phase on Tuesday even as the Securities and Exchange Commission approved ETFs from companies including BlackRock, Invesco, Bitwise and Franklin Templeton.
The eth token was trading at $3,500, where it has remained stagnant in recent days after rising 25% from its lowest point this month.
SEC Approves ethereum Spot ETFs
The SEC approved ethereum spot ETFs this week and expects them to begin trading on Tuesday. This is a big event for ethereum and ETF issuers, as the SEC has frequently warned that it considers Ether a security due to its staking features.
Some of the approved ETFs include Grayscale’s eth, Franklin Templeton’s EZET, VanEck’s ETHV, Fidelity’s FETH, and Blackrock’s ETHA. Most of these funds have a 0% initial fee, while Blackrock’s ETHA has a smaller fee of 0.12%.
After that, Grayscale’s eth will be the cheapest ethereum ETF, with an expense ratio of 0.15%. The other cheapest funds will be EZET (0.19%), ETHV (0.20%) and ETHW (0.20%).
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Buy the rumor, sell the news
In theory, ethereum's price should have surged following the news of these major ETFs. Moreover, bitcoin rose from under $40,000 in January, when the SEC approved spot ETFs, to an all-time high of $73,750.
However, there is also a risk that ethereum could pull back, as the ETF approval was in line with expectations. These expectations partly explain why Ether is up more than 25% since its lowest point this year.
In price action analysis, this situation is known as “buying the rumor, selling the news.” It occurs when an asset rises in anticipation of a big event and then falls when it happens.
A good example of this is what happened in 2023, when the SEC partially lost its lawsuit against Ripple. The XRP token rose to $0.9325 that day and then plummeted by 60% and bottomed at $0.3821 this month.
Fortunately for ethereum, it has formed a bullish flag chart pattern, which is usually a signal for continuation. Further advance will be confirmed if it breaks above the upper side of the flag pattern at $3,570.
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ethereum also has some solid fundamentals. As Blackrock's Jay Jacobs noted, the network has real utility as it is the most popular blockchain network in the world. ethereum” target=”_blank” rel=””>Decentralized Finance (DeFi), metaverse, stablecoins, and non-fungible tokens (nfts). It has over $79 billion in stablecoins and has already raised over $1.8 billion in fees this year.
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ethereum also has a long track record of outperforming bitcoin. It is up 1,600% over the past five years, while bitcoin is up 600%.
Therefore, the same investors who have allocated cash into bitcoin ETFs such as Millenium Management, Susquehanna, and Apollo Global may decide to allocate a portion to these ETFs. All of this is happening at a time when ethereum balances on exchanges have fallen dramatically this year.
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