After Ethereum price crossed $4,000 and Bitcoin reached its all-time high, investors were optimistic about the future of the coins. Nevertheless, the ETH value has dropped by 21% in the last week due to the recent crash in the crypto market. However, investors are hopeful that the upcoming approval of Ether ETFs will drive up the token’s price. Standard Chartered Bank estimates that the SEC could approve an Ether ETF by May 23, leading to around $45 billion entering the market within the initial year. This influx of funds is projected to drive the price of ETH to hit $8,000 by the end of 2024 and $14,000 in 2025. However, the current issue is in case the ETFs are approved, what impact will it have on the price of Ethereum.
ETH ETFs May Not Be Approved
Analysts predict a low chance of ETH ETF approval due to regulators’ lack of communication, with a 28% chance on Polymarket. Bloomberg analysts, Eric Balchunas and James Seyffart, have revised their predictions to 30% and 60-65%, respectively, expressing growing pessimism and minimal progress towards approval with only 73 days left until the deadline.
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Furthermore, political pressure from Senators Reed and Butler on SEC Chairman Gensler to avoid approving more crypto ETFs, citing risks of fraud and manipulation in thinly traded markets, has further decreased the likelihood of approval. Balchunas believes Democratic regrets over the approval of the Bitcoin ETF may impact Ethereum ETF approval, with focus on correlations between ETH futures and spot prices as a key factor.
Overall, the scenario for Ethereum ETF approval seems unlikely, with regulators facing pressure to prioritize investor protection over expanding cryptocurrency investment options.
The success of the BTC spot products clearly ruffling some feathers on the Hill. @SenatorJackReed and @Senlaphonza write to the @SECGov urging:
-no further ETPs for other tokens
-make life difficult (i.e. examinations/reviews) for brokers and advisers that recommend BTC ETPs pic.twitter.com/enxdumC02NRecommended Articles
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The regulator has met with Coinbase and Grayscale, but there have been no public statements made. This has contributed to the lack of clarity.
What Happens Next?
Analysts from crypto trading platform Blofin suggest that a decline might not greatly affect the price of Ethereum. Approval or disapproval of an ETF may have no impact on the price of the altcoin and its holders. They assert that the performance of ETH is largely influenced by market factors such as investors’ behavior and cash flow.
When BTC prices rise, investors tend to sell BTC and buy ETH, boosting the price of ETH. The rapid return of cash liquidity further supports ETH’s price, and its volatility offers potential for growth. More cash flowing into the market has driven up ETH prices, which are expected to continue rising long-term. Positive sentiment is reflected in ETH options and ETF approvals could accelerate this trend.
Competition from other cryptocurrencies like SOL could impact ETH’s market share, as they attract cash liquidity. Despite potential fluctuations, ETH’s leading position is secure for now, but it will face challenges from competitors in the future. The slow and steady return of liquidity to the market will shape the competition for cash flow, posing a significant challenge for ETH.
Another analyst, Adriano Feria asserts that bulls unfazed by potential ETF delays and using the time to accumulate. L2 fundamentals are expected to surge post-Dencun, drawing attention and capital towards $ETH. The memecoin market saturation will lead retail investors to take profits and shift towards $ETH. Approval of the first spot ETF in May could trigger a massive rally in $ETH, attracting institutional capital during a retail influx.
Alternatively, ETF rejections may cause a minor correction but present a buying opportunity. Post-Dencun, increased $ETH pumps may lead to further L2 rallies. Overall, $ETH is poised for significant growth and market dynamics are set to drive up prices in the coming months.
DCinvestor also contends that whether the Ethereum ETF is approved or rejected, it may not affect the altcoin’s price in the short term.
ETH keeps raging on the day when everyone seemingly agrees that ETF may not happen in May
seems like the ETF doesn't actually mean much for near-term ETH price
but just imagine what things look like if it finally drops when ETH is already at $10K or $15K in a raging bull…
— DCinvestor (@iamDCinvestor) March 12, 2024
Current Market Performance of ETH Price
At the time of writing Ethereum price is trading at $3,229.65, a decrease of 1.54% in the past day. However, it has surged by 11% and 81% of the past week and year to day respectively. The toke still remains the second largest cryptocurrency with a market cap of 387.94 billion, reporting a 24-hour trading volume of $32.57 billion.
Conclusion
In the midst of discussion about ETF approval, fluctuations in Ethereum’s price are being closely monitored by investors who are also keeping a close eye on regulatory changes and market trends. Although analysts doubt the chances of approval, the potential increase in funds from ETFs could greatly affect the direction of Ethereum’s price. Even with regulatory uncertainties and competition from other cryptocurrencies, Ethereum continues to maintain a strong market position. The future of Ethereum depends on its capacity to adjust to market changes and uphold investor trust, regardless of the approval or rejection of the ETF.
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With over four years of experience in the cryptocurrency, Fintech, blockchain, and Web3 industries, I bring a wealth of knowledge and expertise to every piece I write. Backed by a Masters in Business Administration, my writing combines insightful analysis with a deep understanding of market trends, technological advancements, and regulatory landscapes. Whether crafting engaging articles, informative guides, or thought-provoking analyses, I strive to deliver content that informs, educates, and inspires readers in this rapidly evolving space.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
