Even though the United States Securities and Exchange Commission (SEC) granted historic approvals for eight exchange-traded funds (ETFs) based on Ethereum, the price of the second largest cryptocurrency by marketcap fails to overcome the $4,000 barrier. Following the SEC’s decision, the price of Ethereum (ETH) rose to almost $3,900, but quickly fell to around $3,720.
Ethereum thus experienced a modest increase of 0.7% in the last 24 hours. However, in the previous week, ETH recorded a gain of over 28%, reflecting some optimism in the market. Despite these gains, the expected push beyond $4,000 has yet to materialize.
Cryptocurrency analyst Jason Pizzino commented on these events: “Ethereum ETFs have been approved. However, that wasn’t enough to push the price beyond $4,000. The ETH/BTC pair also had a weaker rally than anticipated,” Pizzino stated.
This caution on the part of traders suggests that they may be viewing the recent news as a “sell on the news” event. This phenomenon occurs when prices fall after important announcements, as investors take advantage of the news spike to sell.
Market sources pointed to Ambit that the enthusiasm for Ethereum ETFs could be moderate, since it has a key difference with those of Bitcoin: “staking is prohibited: “This for those who do not know what it is, would be something like being forced to accept the pesos without remuneration , while the rest are paid”.
The reaction within the Ethereum ecosystem was mixed. PEPE, for example, hit a new all-time high of $0.00001576 immediately after the ETF’s approval, but then fell more than 8%. Arbitrum (ARB) lost more than 3% after its initial rally. On the other hand, Lido DAO (LDO) went against the tide and advanced more than 12% in the last 24 hours.
This “sell on the news” pattern has been observed before, especially after the SEC approved Bitcoin spot ETFs. Following that announcement, the price of Bitcoin plummeted more than 20%, falling to a low of around $38,000 before recovering.
The SEC’s recent approvals represented a significant change from its previous stance. Amid rumors of imminent approval, fund managers scrambled to review their documents and make crucial amendments in anticipation of a favorable decision.
ETFs simplify the investment process for everyday investors by allowing them to buy stocks that trade on stock markets and track the price of the underlying assets. For traditional investors, these funds offer a regulated and direct entry into the crypto market, eliminating the need for technical knowledge about directly buying, selling and storing crypto assets.
The reasons for the fall of the crypto market
The total capitalization of the crypto market (TOTALCAP) has fallen below the critical support of $2.50 trillion, placing it at a key psychological level whose loss does not bode well for the market. In parallel, Bitcoin is trading at $67,300, reflecting a bearish trend influenced by mixed macroeconomic developments.
TOTALCAP’s drop below $2.50 trillion marks a turning point, and given the adverse macroeconomic conditions, it is more likely that the market will continue to decline. Rising real interest rates have offset even positive news, such as the approval of the Ethereum spot ETF, contributing to the overall bearish trend.
This decline in capitalization could persist, with projections suggesting a possible drop to $2.39 trillion. However, if the market manages to recover the $2.50 trillion level, it could initiate a trend change, pushing TOTALCAP towards $2.60 trillion.
As for Bitcoin, the price registers a red candle for the fourth consecutive day, falling from a high of $71,800 to $67,293 at the time of writing this article. The breakout of support at $68,500 has intensified the bearish trend among investors, which could lead Bitcoin to test the next crucial support at $64,883.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
