Ethereum is slipping after printing higher highs over the weekend. Considering price action, the coin is up roughly 5% from last week’s lows but is still trending below the all-important resistance at $3,700.
Although ETH holders and traders are upbeat, prices must decisively close above this liquidation level, paving the way for more gains in short to medium term.
Will Prices Plunge After Spot Ethereum ETF Begin Trading?
The cause for optimism follows the rapid shift by the United States Securities and Exchange Commission (SEC) to approve the first spot Ethereum exchange-traded fund (ETF) in the country.
Following encouraging events in May, where the agency approved all 19b-4 forms, the product could go live and be accessible to investors and institutions in two weeks.
While there are concerns that the approval of the spot Ethereum ETF could lead to another wave of lower lows, as seen with the spot Bitcoin ETF in January, one analyst is stepping in to reassure holders.
Taking to X, the analyst pointed out that the potential impact of Grayscale selling its Ethereum holdings (ETHE) once spot ETFs go live would be minimal, providing stability and confidence in the market.
This preview concerns ETH’s current state of affairs and the broader Ethereum ecosystem. The market wasn’t prepared for the United States SEC to fast-track the product’s approval this year.
In Bitcoin’s case, prices rose sharply from mid-October as the markets anticipated the spot ETF going live in January. Once launched, it became a “sell the news” event, briefly pushing down prices.
Meanwhile, Ethereum prices are turning lower after marked gains posted on May 20 when news permeated to the community of the United States SEC’s scrambling efforts.
Eyes On Grayscale And ETHE Discount
At the same time, the analyst pointed out that, unlike Grayscale’s GBTC before the approval of spot ETFs, the discount in ETHE is narrow and within the 1-3% range. Currently, Grayscale manages over $10 billion of ETHE.
The tiny discount means traders who bought ETHE for the discount have had sufficient time to sell at near market price. As such, it means that even once a spot Ethereum ETF goes live, selling pressure would be minimal.
Still, only time will tell whether ETH will soar or plunge in the next two weeks. From a regulatory perspective, the clarity that results after the spot Ethereum ETF is released could spark demand, allowing more institutions to gain exposure. K33 analysts predict the product will attract between $3.1 billion and $4.8 billion in net inflows within the first five months of trading.
Feature image from Canva, chart from TradingView
