Ethereum cancels rally expectations as Consensys sues SEC over ETH security status

• Ethereum infrastructure provider Consensys sued the SEC on Thursday after the regulator served it with a Wells notice.
• Ethereum longs could suffer a hit as inside sources have told Reuters that the SEC will likely deny a spot ETH ETF.
• Whales remain positive on Ethereum despite recent price setbacks.

Ethereum (ETH) appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the Securities & Exchange Commission (SEC) and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.

Read more: Ethereum dips slightly amid Renzo depeg, BlackRock spot ETH ETF amendment

Daily digest market movers: spot Ethereum ETFs unlikely

Ethereum's security status and spot ETFs are in the news today following recent unveilings. Here are key Ethereum market movers for today:

• Consensys filed a lawsuit on April 25 against the SEC and its five commissioners—including Chairman Gary Gensler—accusing the regulator of unlawfully seizing authority over Ethereum.

  "The SEC's unlawful seizure of authority over ETH would spell disaster for the Ethereum network, and for Consensys. Every holder of ETH, including Consensys, would fear violating the securities laws if he or she were to transfer ETH on the network," stated Consensys in its complaint. They further claimed that this would crumble the usage of Ethereum in the United States.

  Consensys suit comes after the SEC served it with a Wells notice on April 10. A Wells notice is a formal notification from the SEC that it intends to take legal action against an individual or firm.
  
  The regulator accused Consensys Metamask wallet of acting as a broker that offers and sells securities. Consensys aims to tackle the SEC by demanding in its suit that the court declare "ETH is not a security and Consensys's sales of ETH are not securities transactions." This would mean that any investigation targeted at Consensys is based on the notion that ETH in security will carry no weight.

  The SEC had previously issued subpoenas to three companies for their dealings with the Ethereum Foundation while also serving Uniswap decentralized exchange with a Wells notice earlier in April.

• While Hong Kong has approved spot ETH ETFs to go live on April 30, the US SEC seems set to take an opposite move. According to Reuters, a group of unnamed individuals who participated in a meeting between issuers and the SEC claimed the regulator's staff didn't discuss specific details about the product. The individuals claimed that issuers argued that the SEC's approval of futures ETH ETF in May "set a precedent for spot Ether products."
  
  Chief legal officers of Coinbase and Grayscale, Paul Grewal and Craig Salm, respectively, have also maintained the same position. The individuals said while SEC staff listened, they didn't ask questions or raise any concern, suggesting the regulator would deny the filings, stated Reuters. Bloomberg analysts Eric Balchunas and James Seyffart have earlier lowered their odds of a spot ETH ETF approval in May, stating the SEC's lack of engagement as the major reason.
  
  One of the sources told Reuters, "It's entirely possible we'll eventually see Ether ETFs. But not until somebody is denied and goes to the courts."
  The president of The ETF Store, Nate Geraci, has previously stated that the SEC may face a lawsuit if it fails to approve spot ETH ETFs.

Also read: Ethereum shows signs of a potential rally as suspected Justin Sun wallet buys heavily

• Despite the seemingly bearish news, a suspected Justin Sun wallet has continued scooping up ETH. The wallet bought a total of 28,675 ETH worth $89.84 million on Thursday, according to Lookonchain. Since April 8, it has purchased 176,117 ETH worth $559.7 million at an average price of $3,172.
  
  Whales seem to be bullish on Ethereum, buying heavily at every slight market downturn. Data from Spot On Chain confirms several whales bought ETH on Thursday following the decline.

  Whales appear to remain bullish with $ETH despite the recent market crash!
  
  Will the $ETH price recover soon?
  
  Follow @spotonchain and set alerts for $ETH to know the next significant whale activity now: https://t.co/js2Cq7crji pic.twitter.com/fLbWyLDJ3I

  — Spot On Chain (@spotonchain) April 25, 2024

   

Technical analysis: ETH to resume consolidation

Ethereum seems to be returning to consolidation on Thursday after declining in the past 24 hours. Long liquidations began increasing again, hitting $35.1 million in the past 24 hours.

Read more: Ethereum continues hinting at rally following reduced long liquidations

The $2,852 to $3,300 range appears very strong—both on the upper and lower level—as ETH has been trading inside it for the past 13 days. With the recent decline, ETH may remain inside the range, especially as spot ETH ETFs look highly unlikely with every new piece of information.

ETH/USDT 4-hour chart

However, Bitcoin's price movement will continue to be a deciding factor in how ETH moves in the short term. If Bitcoin resumes an upswing, ETH may likely follow suit and see higher price boosts, considering its recent hint at a rally before the dip. An SEC spot ETH ETF denial may not necessarily snag the Ethereum price as it appears to have already been priced in.

ETH is trading at $3,160, down 0.6% at the time of writing.

 

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