Ether Battles $3,600 Mark Amid ETF Approval Uncertainty and Rising Futures Interest
Summary:
Ether (ETH) has been struggling to surpass the $3,600 mark for days, despite its impressive 58.8% price increase since February. This situation may be due to the uncertainty over the U.S. Securities and Exchange Commission's (SEC) approval of an Ether exchange-traded fund (ETF). The growth of the Ether futures market and the surge in open interest points to robust demand from institutional investors. However, the increased demand for leveraged long positions shouldn't be interpreted as a bullish indicator solely. Analysts suggest moderate optimism in the Ether derivatives market. However, they are less hopeful about ETH crossing the $3,800 threshold.
Ether (ETH), the second-largest cryptocurrency after Bitcoin, has been battling to break past the $3,600 mark for the last three days. However, it's noteworthy that the price of ETH has skyrocketed by 58.8% since February. Reasons for the stagnation at the current price point could be due to uncertainty over the approval of an ETH exchange-traded fund (ETF) in the United States. Nonetheless, the increased interest in Ether futures indicates a robust demand from significant investment entities.The fate of the possible spot ETF approval for Ether may hinge on the resolution of the case against crypto exchange KuCoin by the U.S. Justice Department. Although some view this as a setback due to stricter regulations, others contend that this situation could increase the chances of an Ether ETF being sanctioned by May 25th, the deadline for the U.S. Securities and Exchange Commission's (SEC) decision. The U.S. Commodity Futures Trading Commission (CFTC) has accused KuCoin of illegal trading activities and identified Bitcoin, Ether, and Litecoin as commodities subject to the CFTC's jurisdiction, challenging SEC's claim that Ether might qualify as a security.BlackRock CEO Larry Fink suggested in a March 27th FOX Business interview that even if Ether is deemed a security, an Ether ETF listing may still be plausible. However, according to senior ETF analyst for Bloomberg, James Seyffart, the prospects of approval in May are slim, considering the CFTC's recognition of Ether as a commodity from as early as February 2021 when it approved trading Ethereum futures on the CME.The Ether futures market's expansion positively impels participation from large asset managers and hedge funds. However, attributing the record high of Ether futures aggregate open interest solely to institutional investors oversimplifies the situation. It’s essential to balance out that elements in every derivatives market comprise equal volumes of those betting for a price increase and those expecting a decline.The Ether derivatives market is showing moderate optimism, as demonstrated by the perpetual futures 8-hour funding rate. When gauging professional traders' sentiment, the Ether options market's data, specifically the 25% delta skew, can be a valuable tool. Currently, the Ether options delta skew depicts a balanced price expectation, indicating a neutral market position. However, a shift from the optimism registered on March 21st shows traders are now less enthusiastic about Ether reaching above the $3,800 mark.
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Published At
3/29/2024 12:15:00 AM
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