Ethereum
Ethereum Price Could See a Pullback After ETF Approval
Ethereum price was in a consolidation phase Tuesday even as the Securities and Exchange Commission approved ETFs from companies including BlackRock, Invesco, Bitwise and Franklin Templeton.
THE ETH The token was trading at $3,500, where it had been stuck in recent days after rising 25% from its lowest point this month.
SEC Approves Ethereum Spot ETFs
The second approved Ethereum ETFs were spotted this week and are expected to begin trading on Tuesday. This is a significant event for Ethereum and ETF issuers, as the SEC has repeatedly warned that it considers Ether a security due to its staking features.
Approved ETFs include Grayscale’s ETH, Franklin Templeton’s EZET, VanEck’s ETHV, Fidelity’s FETH, and Blackrock’s ETHA. Most of these funds have a 0% initial fee, with Blackrock’s ETHA boasting a more modest 0.12% waiver.
After that, Grayscale’s ETH will be the cheapest Ethereum ETF, with an expense ratio of 0.15%. The next cheapest funds will be EZET (0.19%), ETHV (0.20%), and ETHW (0.20%).
What do we expect from Ethereum ETFs today?
We expect the ETFs to begin trading tomorrow. That means we should see a series of filings on the SEC website today indicating that the ETF prospectuses have gone into effect. Probably after or around the market close. Here are the participants in the race: pic.twitter.com/AkBxEjBRvv
— James Seyffart (@JSeyff) July 22, 2024
Buy the rumor, sell the news
In theory, Ethereum’s price should have surged after the announcement of such large ETFs. Additionally, Bitcoin has risen from below $40,000 in January, when the SEC approved spot ETFs, to a record high of $73,750.
There is, however, a risk that Ethereum could pull back, as the ETF approval was in line with expectations. Those expectations are part of the reason why Ether is up more than 25% from its year-to-date low.
In price action analysis, this situation is known as “buy the rumor, sell the news.” It occurs when an asset rises in anticipation of a major event, then falls when it actually occurs.
A good example is what happened in 2023, when the SEC partially lost its lawsuit against Ripple. The XRP token spiked to $0.9325 that day, then fell 60% and bottomed at $0.3821 this month.
Fortunately for Ethereum, it has formed a bullish flag chart pattern, which is often a sign of continuation. Further upside will be confirmed if it breaks above the upper side of the flag pattern at $3,570.
Ethereum price has formed a bullish flag pattern
Ethereum also has strong fundamentals. As Blackrock’s Jay Jacobs noted, the network has real utility as it is the world’s most popular blockchain network. Decentralized Finance (DeFi), metaverse, stablecoins and non-fungible tokens (NFTs). It owns over $79 billion in stablecoins and has already collected over $1.8 billion in fees this year.
Here is BlackRock’s Ether pitch to normies via @JayJacobsCFA“While many see bitcoin’s primary appeal in its scarcity, many see ethereum’s appeal in its utility. One could think of ethereum as a global platform for applications that operate without decentralized intermediaries.” $ETHA pic.twitter.com/ffyglfSTiB
— Eric Balchunas (@EricBalchunas) July 22, 2024
Ethereum also has a long history of outperforming Bitcoin. It has increased by 1,600% over the past five years, while Bitcoin has surged by 600%.
Therefore, the same investors who have been investing cash in Bitcoin ETFs like Millenium Management, Susquehanna, and Apollo Global may decide to invest some of it in these ETFs. All of this is happening at a time when Ethereum Balances in trade have fallen sharply this year.