Ethereum's Price Drops as SEC ETF Decision Looms

In this article, we'll cover the latest developments in the cryptocurrency market, focusing on Ethereum's price movement and the community's expectations surrounding the SEC's decision on spot Ethereum ETFs.

Crypto Markets Digest US Inflation Data

Most cryptocurrencies, including Ethereum, experienced declines on Thursday as markets processed the latest US inflation data. The data showed that consumer prices rose 3.4% year-over-year in April, down from 3.5% in March. On a monthly basis, consumer prices increased by 0.3%, a slowdown from the 0.4% rise in March.

Optimism for Fed Rate Cuts

The inflation figures raised optimism about the possibility of multiple Federal Reserve rate cuts this year. Chicago Fed President Austan Goolsbee expressed confidence that inflation will continue to decline in the coming months. He reiterated Fed Chair Jerome Powell's remarks that it's unlikely the Fed will need to raise interest rates further. According to the FedWatch tool, there's a 51.7% chance the Fed will cut interest rates at the September meeting.

Ethereum Price Movement

In the trading session, Ethereum fell 2.4% as of 21:04 GMT on CoinMarketCap, dropping to $2,946.5. The decline came as Ethereum dipped below the $3,000 key level again, despite showing signs of a rally earlier.

Spot ETH ETF Debate in Crypto Community

The recent price action follows several predictions from the crypto community regarding the Securities & Exchange Commission's (SEC) decision on spot ETH ETFs next week. The community is actively sharing their views on whether the SEC will approve or deny the applications.

Differing Perspectives on SEC's Decision

Former Ethereum Foundation chief decentralization officer Evan Van Ness suggested that the market is underestimating the chance of SEC boss Gary Gensler approving spot ETH ETFs while still claiming that Ethereum is a security. This contrasts with predictions that the SEC's recent crackdown on Ethereum-related firms is aimed at classifying the largest altcoin as a security and denying spot ETH ETF applications.

However, BlackRock CEO Larry Fink has stated that the SEC could still approve spot ETH ETFs even if it classifies Ethereum as a security, aligning with revelations that the SEC has considered ETH a potential security since April 2023 but approved ETH futures ETFs in September.

Opposing Views and Predictions

Eric Conner, co-author of Ethereum Improvement Proposal EIP-1559, expressed confidence that the SEC would approve spot ETH ETFs on May 23. On the other hand, user @fewture suggested that the agency might not approve or deny the applications, leading to a de facto approval but potential legal challenges from the SEC.

Bankless podcast host Ryan Sean Adams speculated that if the Biden administration recognizes the potential political ramifications of Gensler's anti-crypto stance, they might pressure him to approve the ETFs, although he acknowledged it as a long shot.

Challenges for ETH ETF Approvals

Many expect the SEC to deny the spot ETH applications from VanEck, ARK 21Shares, and Hashdex this month but anticipate greater challenges when dealing with applications from Grayscale, Fidelity, BlackRock, and Invesco.

Technical Analysis and Market Uncertainty

From a technical perspective, Ethereum traders remain uncertain. While Ethereum briefly broke past the $3,000 mark on Wednesday, it has been witnessing slower growth compared to Bitcoin and Solana in this cycle. The ETH/BTC ratio has been on a steady decline since the beginning of the year, although some predict it may be reaching a bottom and could bounce back soon.

The ETH/USDT pair reveals market uncertainty, with open interest hovering around 0.5% and ETH liquidations sitting at $23.79 million, with $18.29 million coming from liquidated long positions. Ethereum failed to overcome the $3,103 resistance of April 26 and is expected to hold the $2,852 key support level in hopes of a potential bounce back. However, continued uncertainty may prevent any sustained bullish move in the next few days.

Conclusion

As the crypto community eagerly awaits the SEC's initial decision on VanEck's spot ETH ETF on May 23, market participants are closely monitoring Ethereum's price movement and the potential impact of the regulator's decision. The differing perspectives within the community highlight the uncertainty surrounding the SEC's approach and the potential implications for the future of Ethereum and the broader cryptocurrency ecosystem.