Ethereum is trending lower after hitting record highs over the weekend. Considering the price movement, the coin is up about 5% from last week’s low but is still falling below the most important resistance level of $3,700.
ETH holders and traders are optimistic, but the price should decisively close above this liquidation level, paving the way for further gains in the short and medium term.
Will the price of the spot Ethereum ETF plummet after it begins trading?
The cause for optimism follows the rapid move by the U.S. Securities and Exchange Commission (SEC) to approve the first spot Ethereum exchange-traded fund (ETF) in the United States.
Following an encouraging event in May when agencies approved all 19b-4 forms, the product was launched and made accessible to investors and institutions within two weeks.
While there are concerns that the approval of a spot Ethereum ETF could lead to another record low as seen with the spot Bitcoin ETF in January, one analyst is stepping in to reassure holders.
Let’s look at X, the analyst. pointed out The potential impact of Grayscale selling its Ethereum holdings (ETHE) after the spot ETF is launched will be minimal, providing stability and confidence to the market.
This preview is about the current state of ETH and the broader Ethereum ecosystem. The market was not ready for the U.S. SEC to expedite product approval this year.
Bitcoin’s price has surged since mid-October as the market anticipated the launch of a spot ETF in January. Once released, it became a “news sale” event and the price dropped briefly.
Meanwhile, the price of Ethereum is turning downward after the rally seen on May 20, when news of the US SEC’s confusing efforts spread through the community.
Eyes On Grayscale and ETHE Discount
At the same time, the analyst pointed out that unlike Grayscale’s GBTC before the spot ETF was approved, the ETHE discount was narrow, within the range of 1-3%. Grayscale currently manages over $10 billion of ETHE.
A small discount means that traders who bought ETHE for the discount have enough time to sell it at near market price. Therefore, this means that even if a spot Ethereum ETF is launched, selling pressure will be minimal.
But only time will tell whether ETH will surge or plummet over the next two weeks. From a regulatory perspective, once the outcome becomes clear after the launch of a spot Ethereum ETF, it could spark demand and expose more institutions. K33 Analyst predict The product will attract net inflows of $3.1 billion to $4.8 billion within the first five months of trading.
Featured image from Canva, chart from TradingView