Ethereum Price Dips, Fueled by Rising Crypto Market Liquidations and Waning ETF Approval Expectations
Summary:
Ethereum's price experienced a significant 6.7% decrease between April 24-25, mirroring Bitcoin's market performance. Factors contributing to the slump include an increase in broader crypto derivatives market liquidations and dwindling expectations for US approval of a spot Ethereum ETF. The SEC is projected to deny spot Ether ETF applications in May, based on unsuccessful recent engagements with the regulator. After a peak of $3,227 on April 9, Ether's rebound price is now $3,134, suggesting more dips could be on the horizon.
Ether's price, popularly abbreviated as ETH, has experienced a downturn, with a significant 6.7% decrease noticed between April 24 and 25 as it hovered around the $3,100 mark. This trend is notably similar to Bitcoin's (BTC) performance, which fell under $63,000 on April 25, marking a 6.5% decrease over the same duration.
The slump in Ether's price can be traced to numerous factors including an increase in broader crypto derivatives market liquidations, dwindling expectations for the sanction of a spot Ethereum ETF in the United States, and the current bearish technical phase of Ether.
On January 11, the approval of spot Bitcoin exchange-traded funds (ETF) by the U.S. Securities and Exchange Commission (SEC) led to a surge in investor confidence. Many anticipated that this move would catalyze the approval of a spot Ether ETF. Multiple applications for this project are currently awaiting review by the SEC, with a verdict due on May 23, the appointed statutory deadline.
However, a recent development suggests the SEC projections for the approval of a spot Ether ETF in May appear bleak. An April 24 Reuters article highlighted talks with the SEC that left issuers and firms predicting a denial of these applications in May, following unsuccessful engagements with the regulator.
The recent dialogue between the SEC and the interested parties was reportedly one-sided, with substantive discussions about the proposed products missing. The apparent lack of engagement from the SEC has stoked doubts about a spot Ethereum ETF approval in the U.S.
The slump in Ether's price was also linked with a surge in liquidations in the altcoin's derivatives market. Data from Coinglass reveals more than $45.36 million in Ether long positions were liquidated within a 24 hour span, with $17.31 million eliminated in just the previous 4 hours. In correlation, the crypto market has seen $261.96 million in leveraged positions liquidated, with long positions equating to $226.7 million of this figure.
Liquidation of long positions causes assets to be automatically sold off in the market, leading to an increased asset supply and, subsequently, lower prices.
Currently, Ether's price has rebounded to $3,134 from a peak of $3,227 on April 9, representing a 23.53% reduction. However, the presence of a bear flag on the daily chart suggests more dips could be on the horizon.
Ether investors are banking on support from the flag’s lower boundary at $3,091, fortified by the 50-day exponential moving average (EMA). A daily candlestick closing below this figure would signal a bearish breakout, potentially causing a decline as low as $2,381 and a total loss of 24%.
The relative strength index (RSI) currently stands below 50, implicating a probable decrease in market conditions. However, as always, every investment and trading move carries risk, and individuals must conduct thorough research before making decisions.
Published At
4/25/2024 8:18:12 PM
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