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Ethereum is sliding after hitting record highs over the weekend. Looking at the price action, the coin is up about 5% from last week’s lows but is still trending below the most important resistance level at $3,700.
Although ETH holders and traders are optimistic, prices should close decisively above this liquidation level, paving the way for further gains in the short to medium term.
Will prices drop after spot trading of Ethereum ETFs begins?
The reason for optimism comes in the wake of the rapid shift by the US Securities and Exchange Commission (SEC).second) to approve the country’s first Ethereum spot trading fund (ETF).
After encouraging events in May, where the agency approved all 19b-4 forms, the product could be launched and available to investors and institutions within two weeks.
While there are concerns that the approval of a spot Ethereum ETF could trigger another wave of lower declines, as seen with the spot Bitcoin ETF in January, one analyst is stepping in to reassure holders.
Moving to X, analyzer pointed out The potential impact of Grayscale selling its Ethereum (ETHE) holdings once spot ETFs go live will be minimal, providing stability and confidence in the market.
This preview relates to the current state of ETH and the broader Ethereum ecosystem. The market was not prepared for the SEC to speed up approval of the product this year.
In the case of Bitcoin, prices rose sharply from mid-October as markets expected spot ETFs to go live in January. Once launched, it became a “sell-the-news” event, sending prices briefly lower.
Meanwhile, Ethereum prices fell following notable gains made on May 20 when news of the SEC scramble efforts filtered through to the community.
Eyes on Grayscale and ETHE Discount
At the same time, the analyst noted that, unlike Grayscale’s GBTC before spot ETFs were approved, the discount in ETHE is narrow and ranges between 1-3%. Currently, grayscale Manages Over $10 billion in ETHE.
The small discount means that traders who bought ETHE at the discount had enough time to sell at a price close to the market price. As such, it means that even once the spot ETF goes live, selling pressure will be minimal.
However, only time will tell whether ETH will rise or fall in the next two weeks. From a regulatory perspective, the clarity that occurs following the issuance of an Ethereum spot ETF could lead to increased demand, allowing more institutions to gain exposure. K33 Analysts pridect The product will attract between $3.1 billion and $4.8 billion in net inflows during the first five months of trading.
Featured image from Canva, chart from TradingView
