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SEC Postpones Ethereum ETF — How Will the ETH Price React?

Last Updated February 7, 2024 4:08 PM
Nikola Lazic
Last Updated February 7, 2024 4:08 PM

Key Takeaways

  • SEC delays decision on Invesco-Galaxy Digital’s spot Ethereum ETF.
  • Regulatory uncertainty persists for Ethereum-related investment products.
  • The May deadline for ETF approval could boost Ether’s price.

The United States Securities and Exchange Commission has postponed the decision on a proposed Ethereum ETF by Invesco and Galaxy Digital, highlighting uncertainty in cryptocurrency regulation in the US. This ETF aims to provide direct exposure to Ethereum’s ETH, currently mainly accessed by American investors through futures. 

The delay, expected by analysts, is part of a pattern of postponements for Ethereum-related products. These reflect the SEC’s cautious approach to crypto investments. This ongoing uncertainty could affect Ethereum’s price negatively in the short term. However, the tide might turn with the ETH ETF approval deadline approaching in May. 

What Can We Expect in May? 

Analysts, including Bloomberg’s James Seyffart , had anticipated this delay, noting May 23’s deadline for VanEck’s Ethereum ETF proposal. Similar postponements have affected other Ethereum investment products, including Grayscale’s attempt to transform its Ethereum trust into an ETF and BlackRock’s ether ETF proposal.

Despite these challenges, financial analysts predict a bullish future for ETH, expecting it to outperform Bitcoin (BTC) in the coming months, particularly as the May deadline for ETF approval approaches. Standard Chartered Bank has also expressed a positive outlook for Ethereum’s price performance relative to Bitcoin.

The SEC’s hesitance has elicited varied reactions from the investment community. Some maintain a hopeful outlook, while others worry about the enduring uncertainty in regulatory approvals.

ETH Price Analysis 

As we pointed out in some of our previous ETH analyses, there is a high chance of the price heading into a more extensive corrective phase. We saw a bullish structure start from June 2022, when it traded at a low of $900. This phase ended at the $2,700 high on January 12, 2024.  

Daily chart.
Ethereum likely entered its corrective phase.

This ascending channel could have represented the completion of a five-wave pattern. With slightly higher highs and higher lows, it could be interpreted as a leading diagonal. If this is the case,  ETH has started its first bull market correction, with the last downtrend going from January’s high to a recent low of $2,180. 

The price of ETH is increasing. According to our theory, this last rise should end as a lower high. But, if the price goes above $2,700, that would mean the first bull market uptrend hasn’t finished. Therefore, there would still be more room on the upside. 

The daily chart Relative Strength Index (RSI) was around 40% on the last low, suggesting more room on the downside. If we compare it to previous correlations, we can see the RSI usually indicates a low in its oversold zone at around 30%. 

Primarily, we would be looking at the zone around $2,000 of the potential stopping point of this ABC correction. However, the price could land between $2,100 and $1,840 where the 0.5 and the 0.618 Fibonacci retracement levels are. 

Disclaimers

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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