• Ethereum ETFs were approved partly because of Bitwise's correlation analysis.
  • Analysts expect spot ETH ETF to disappoint due to key metrics.
  • Ethereum faces temporary sell-off after its first double-digit gain in months.

Ethereum declined briefly on Friday as experts weighed in on why the Securities & Exchange Commission (SEC) approved spot ETH ETF applications and when to expect S-1 comments from the agency.

Read more: SEC approves spot Ethereum ETFs after shocking U-turn

Daily digest market movers: Why SEC approved ETH ETFs

Several experts have pointed out that the SEC approved 19b-4 spot ETH ETF filings on Thursday due to spot ETH price’s high correlation with CME Ethereum futures prices, similar to that of Bitcoin. As a result, it concludes that spot ETH is tightly linked to the regulated CME futures market. The SEC used Bitwise's correlation analysis filed with its spot ETH ETF to arrive at this conclusion.

Immediately after the ETFs were approved, Van Eck submitted an amendment to its S-1 application. This follows amended S-1 submissions from Fidelity and Grayscale.

BlackRock also unveiled ETHA as the ticker for its spot ETH ETF, according to a listing on DTCC.

Scott Johnsson, a general partner at Van Buren Capital, mentioned that the SEC's pace and breadth of first comments on S-1 filings are key to watch as they are the next key steps before a spot ETH ETF launch.

Bloomberg analyst Eric Balchunas speculated that the SEC's comments may come in four to six weeks. He also noted that one of the challenges ETH ETFs will face in attracting boomers is "distilling its purpose/value into an easy-to-understand sound bite a la "Bitcoin is digital gold."

Also read: Ethereum on the brink of 75% rally as SEC approves ETH ETFs

According to crypto researcher Noelle Acheson, spot ETH ETFs will meet a disappointing reception when they launch. He highlighted the CME's low interest in ETH derivatives — ranking fifth — as a signal suggesting spot ETH ETFs may not be attractive.

"The relatively low participation from the same institutions that will probably be expected to pour into the ETH spot ETF upon launch, suggests that the initial inflows could be disappointing," Acheson said. 

He also pointed to ETH accounting for only 15% of the total assets under management (AUM) of Hong Kong's spot crypto ETFs. Additionally, he shared how some investors may not be willing to part ways with their staking yields to subscribe to these ETFs, as many experts suggest the SEC may not allow issuers to stake their assets.

ETH technical analysis: Ethereum sell-off may be temporary

Ethereum is trading around $3,730 on Thursday after moving below the $3,730 price level. In the case of a further decline, the next level to watch out for is the $3,605 support. While prices have yet to react to the 19b-4 spot ETH ETF filings approval, the market may be awaiting the final approval of S-1 applications and the official launch before taking action.

ETH/USDT 4-hour chart

ETH/USDT 4-hour chart

That said, investors may temporarily take profits at this level, considering the recent rise is ETH's first double-digit gain in nearly two months. With over 91% of holders in profit, ETH may have faced huge sell-offs ordinarily if there had been no expectation for a spot ETH ETFs.

Read more: Ethereum bulls await ETF approval as BlackRock, Bitwise, Grayscale submit amended ETH ETF filings

However, ETH is expected to rally in the coming weeks and set a new all-time high above $4,878 when spot ETH ETFs eventually launch. Coupled with this, as many didn't price in the approval of an ETF, ETH may likely trade higher in the coming weeks. This bullish thesis will be invalidated if ETH declines 10% to  below the $3,301 support.

Ethereum FAQs

Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.

Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.

Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.

Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram

Recommended content

Recommended Content

Editors’ Picks

DOGE holders may sell if it rises above key accumulation zone

DOGE holders may sell if it rises above key accumulation zone

DOGE will reclaim a key level if it rises by 5%, and traders will likely sell as they break even. DOGE's social volume has reached its lowest level in the past year. DOGE has underperformed other top meme coins year-to-date.

More Dogecoin News

SEC vs. Coinbase: Coinbase attorney's arguments fail to convince judge

SEC vs. Coinbase: Coinbase attorney's arguments fail to convince judge

SEC vs. Coinbase hearing on Thursday addresses the exchange’s demand that Chair Gary Gensler should testify. Coinbase Attorney Kevin Schwartz’s arguments fail to convince Judge Katherine Polk Failla.

More Cryptocurrencies News

Ethereum on-chain activity reveals mixed signals amid declining inflation

Ethereum on-chain activity reveals mixed signals amid declining inflation

Ethereum could rally in Q3 following reduced US inflation and launch of spot ETH ETFs. Ethereum's on-chain activity shows mixed sentiment among investors. Bearish exhaustion candle could signify a downturn for ETH if SEC delays ETH ETF approval.

More Ethereum News

Biden's veto stands, banks unable to  provide custody services for crypto

Biden's veto stands, banks unable to  provide custody services for crypto

US House failed to muster a two-thirds vote to overturn President Biden's veto of Joint Resolution 109. Several Democrats failed to support a repeal of the President's veto despite the increasing role of the crypto industry in the upcoming election.

More Cryptocurrencies News

Bitcoin: BTC sinks under $55,000 as Mt Gox prepares payment to creditors

Bitcoin: BTC sinks under $55,000 as Mt Gox prepares payment to creditors

Bitcoin (BTC) price is having its worst week of the year, influenced by selling activity among BTC miners and heavy transfers of Bitcoins to exchanges by Mt Gox and the German Government. 

Read full analysis