Ethereum bears attempt to take lead following increased odds for a spot ETH ETF denial

Ethereum (ETH) is indicating signs of a bearish move on Tuesday as it is largely trading horizontally. Its co-founder Vitalik Buterin has also proposed a new type of gas fee structure, while the chances of the Securities & Exchange Commission (SEC) approving a spot ETH ETF decrease with every passing day.

Read more: Ethereum trades horizontally as institutional whales dump heavily on Coinbase

Daily digest market movers: Calldata gas in EIP-7706, spot ETH ETFs see diminished odds

Ethereum could be poised for new upgrades following recent proposals. Here are market movers for the largest altcoin:

• Ethereum co-founder Vitalik Buterin proposed a new type of gas fee structure in a new Ethereum Improvement Proposal, EIP-7706, on Tuesday.
  
  The proposal aims to reduce gas fees for data-heavy transactions that don't require much resources for computation through the introduction of a new type of gas uniquely assigned to calldata. The current gas structure of Ethereum involves only two types of gas, namely execution gas, which covers fees for the computational resources to process transactions, and storage gas, which covers the cost of storing data specifically in "blobs.
  
  EIP-7706 introduces the third category related to calldata - a key part of Ethereum transaction that's transmitted to a smart contract "when functions are invoked." Buterin also recommended in the proposal that Ethereum switch from using separate mechanisms and leverage a common approach for the different gas fees. EIP-7706 could lower gas fees for certain transactions while improving the user experience if the Ethereum community approves it.
  
  The proposal follows an earlier essay on multidimensional gas pricing and the EIP-7702 proposal on account abstraction co-authored by Vitalik Buterin.

Also read: Ethereum declines briefly, JP Morgan sees a spot ETH ETF approval despite recent Wells notice

• As the May 23 deadline for the SEC to decide on Van Ecks' spot ETH ETF application approaches, General Partner at Van Buren Capital, Scott Johnsson, revealed findings in an X post indicating the agency is "considering the security question for ETH."

  I'm aware this is widely considered a possibility, but this is your official notice that the SEC is considering the security question for ETH in this upcoming spot ETF order. Note that this question was never (afaict) asked regarding a spot/futures BTC ETF product. pic.twitter.com/TwhqmTnJfC

  — Scott Johnsson (@SGJohnsson) May 14, 2024

  ​​​​​​In response to the findings, Bloomberg analyst James Seyffart concluded that the odds for the SEC to deny a spot ETH ETF have increased. However, he stated that the SEC may not likely claim Ethereum to be a security as a reason for potentially denying spot ETH ETF applications. Meanwhile, Chairman at CoinRoutes David Weisberger suggested the SEC is "trying to ascertain how much political damage such a move will do."
  
  Bloomberg analyst Eric Balchunas maintained the same stance of approval being slim in an X post.

  TLDR: the SEC asked commenters re the Eth spot ETFs whether these filers have properly filed their ETF listing proposals as commodities. This shows the SEC is perhaps considering to Eth is a security in their denial. Our odds of approval remain the same: slim to none. Nice job of… https://t.co/g9HGPzGyOp

  — Eric Balchunas (@EricBalchunas) May 14, 2024

ETH technical analysis: Ethereum primed to stay above key support despite bearish sentiment

Ethereum is trading around the $2,900 price level on Tuesday after failing to balance a previous price inefficiency from Friday. In the short term, most traders are slightly bearish as long liquidations hit $24.22 million in the past 24 hours, according to data from Coinglass. ETH's open interest declined by 1.8%, confirming the short-term bearish sentiment. This may be because of heightened expectations of a spot ETH ETF denial by the SEC.

Read more: Ethereum needs a bullish trigger, Joseph Lubin blasts the SEC

However, ETH may quickly bounce back up or at least sustain a sideways movement as the $2,852 price level has proven to be a key support for ETH — it has only gone below it once in nearly three months. The next leg up may see ETH attempt to break past the $3,161 resistance.

ETH/USDT 4-hour chart

ETH may not see huge price gains in the coming days, considering investors are exercising caution as the SEC's decision on ETH ETFs looms.

Additionally, the current price level could also prove a good buy opportunity for long-term holders in anticipation of ETH's next price rally.