Ethereum resume sideways move as Grayscale files to withdraw Ethereum futures ETF application with the SEC

Ethereum is hinting at a resumption of a sideways movement on Tuesday after seeing inflows for the first time in seven weeks. Grayscale withdrew its application for an Ethereum futures ETF, and the Securities & Exchange Commission’s (SEC) Chair Gary Gensler has also called most crypto assets securities following a Wells Notice targeted at ETH-related firms.

Read more: Ethereum traders show uncertainty, SEC delays decision on Invesco's ETH ETF application

Daily digest market movers: ETH inflows, whale transfers, SEC Chair

Ethereum's price uncertainty among investors is increasing despite recent updates surrounding the largest altcoin. Here are the top market movers:

• Grayscale withdrew its 19b-4 application for an Ethereum futures ETF in a recent filing on Tuesday. The asset manager initially filed for an Ethereum futures ETF on September 19 but faced several delays from the SEC, which was scheduled to decide on it on May 30.
  
  Bloomberg analyst James Seyffart had earlier said that Grayscale’s application for an Ethereum futures ETF was a Trojan horse to corner the SEC into approving its Ethereum spot ETF application. The idea is that approving a futures ETF would mean the SEC agrees that ETH is a commodity and, hence, would have minimal reasons not to approve its spot ETF version.
  
  However, with the withdrawal of Grayscale’s application only a few weeks before the SEC’s decision, Seyffart has expressed confusion as to why the asset manager would make this move. The SEC is due to decide on Van Eck’s spot Ethereum ETF application on May 23, with decisions on other applications coming subsequently.

Also read: Ethereum could see a brief rally despite Michael Saylor's jab at ETH ETFs

• In an interview on CNBC Squawk Box on Tuesday, SEC Chair Gensler said that most crypto assets are securities "under the law of the land as interpreted by the US Supreme Court." This response comes after he was asked about his agency's recent action to file a Wells Notice against Robinhood Crypto on Monday.
  
  He further stated investors are not getting the "required disclosures" about these crypto assets. Gensler seemed to avoid the question when pressed if he considers Ethereum a security or commodity and, ultimately, the possibility of a spot ETH ETF.
  
  "All I would say is, to me, the fundamental question is how do we ensure that the American investor is protected?" said Gensler. "Right now, they're not getting the required or needed disclosures, and the intermediaries in the center of this rather centralized market generally are conflicted and doing things we would never allow the New York Stock Exchange to do."
  
  Fortune earlier reported that the SEC may be aiming to classify Ethereum as a security after subpoenaing several firms for facilitating the buying and selling of Ethereum. Ethereum infrastructure provider Consensys also announced it received a Wells notice from the regulator.
  
  In a court filing, Consensys revealed the SEC had secretly considered ETH a security through investigative actions labeled at several firms.
   
• Ethereum institutional investors appear to be turning bullish for the first time in nearly two months. After seeing seven weeks of consistent outflows, ETH "broke its 7-week spell of outflows," raking in $30 million in inflows, according to data from CoinShares.
   
• Following ETH's recent bull-bear stalemate, FTX/Alameda Research addresses have transferred approximately 2,000 ETH worth $6.17 million to Coinbase, according to PeckShieldAlert. FTX/Alameda Research addresses have previously been marked for occasionally transferring ETH to exchanges moments before a market downturn.
   
• In the past 24 hours, hackers related to the Poloniex exchange and KronosResearch hack have transferred 1,100 ETH and 1,000 ETH, respectively, to US-sanctioned mixing protocol Tornado Cash, PeckShieldAlert data shows.

ETH technical analysis: ETH could begin sideways movement again

Ethereum is looking to resume a sideways movement again on Tuesday after failing to stay above the $3,161 resistance.

Read more: Ethereum to break out of bearish move, ETH ETFs unlikely in 2024

ETH/USDT 4-hour chart

ETH's current price action suggests the popular altcoin would likely follow a horizontal pattern — but more tilted towards shorts — amid uncertainty among traders.

This is confirmed by ETH's liquidations data, which — having slowed down — still sees long liquidations forming the bulk of the digital asset's total liquidations. ETH long liquidations are at $34.56 million, while shorts are at only $8.25 million, according to data from Coinglass.

Coinglass data also shows that Ethereum's open interest has remained relatively flat for the past four days, further strengthening the sideways thesis. If ETH goes below the $3,029 support, it may begin a brief bearish trend.

However, the $2,852 to $3,300 key range is also proving strong as ETH may not see any sustained move outside in the next few weeks, except if the price of Bitcoin sees a significant spike.

Ethereum is trading around $3,067, down 0.3% on the day.