Bitcoin ETF Decision by SEC Could Pave the Way for Ethereum and Impact Crypto Market
Summary:
The U.S. Securities and Exchange Commission (SEC) is moving towards its Bitcoin (BTC) ETF decision on Jan. 10, and if approved, it could greatly influence other cryptocurrencies, particularly Ethereum (ETH). A positive outcome could establish a regulatory path for Ethereum and other crypto-based ETFs. Several Ethereum ETF applications have been delayed until May 2024, possibly boosting ETH prices. Furthermore, Ethereum price correlations with Bitcoin suggest potential substantial growth with an ETF approval. From a technical standpoint, however, a delay or denial could also lead to short-term bearish pressure.
The U.S. regulatory body, the Securities and Exchange Commission (SEC), is heading towards the deadline for its decision on the Bitcoin (BTC) exchange-traded fund (ETF) on Jan. 10, with optimism throughout the market about the potential green light. This key ruling could significantly impact the cryptocurrency market, potentially affecting Ethereum (ETH), the cryptocurrency with the second-largest market capitalization.
Potential for Ethereum ETFs
A positive ruling on a Bitcoin ETF could establish a regulatory pattern that would simplify the approval process for other cryptocurrency ETFs. The theory is that the approval of a Bitcoin ETF may potentially result in setting up a framework that could be valid for additional cryptocurrencies, including Ethereum.
The SEC postponed making a decision on several Ethereum ETF applications in the U.S in December 2023 until May 2024. These include submissions from Hashdex Nasdaq Ethereum ETF, Grayscale Ethereum Futures ETF, VanEck spot Ethereum ETF, and a spot Ethereum ETF submitted by Cathie Wood's ARK Invest and 21Shares.
The deferred decisions are part of the SEC's due process, consisting of garnering public opinion before deciding on whether to list these ETFs. However, these delays align with the regulator's endeavor to classify certain proof-of-stake (PoS) cryptocurrencies as securities.
Notably, none of the SEC's recent lawsuits targeting crypto exchanges classify Ethereum as a security. Furthermore, the Commission hasn't questioned Ethereum's categorization through the ETF registration procedure with the Commodity Futures Trading Commission (CFTC).
Therefore, the approval of a spot Ethereum ETF in the U.S. by May 2024 seems plausible, which could potentially bolster ETH prices.
Correlation between Ethereum and Bitcoin
Unless granting a Bitcoin ETF approval results in a sell-off moment, Ether's price is favorably positioned for a surge, owing to its long-standing correlation with BTC price movements.
In essence, the approval of a Bitcoin ETF could lead to a significant rise in crypto interest among conventional investors. Consequently, this probable surge in demand might boost Ethereum's price. However, a dismissal or postponement could impose short-term bearish pressure as the market recalibrates.
A recent survey by Bitwise revealed that merely 39% of American financial advisors anticipate a Bitcoin ETF being approved this year.
Technical Indicators for Ethereum Price Suggest Corrections
From a technical perspective, prior to the Bitcoin ETF decision, ETH's price is hovering near the resistance trendline of its prevailing rising wedge pattern. A postponement or denial may drive a price correction toward the wedge's lower trendline near $1,865 by February.
Notably, the $1,865 position aligns with ETH's 0.236 Fibonacci line and its 50-week exponential moving average (50-week EMA; the red wave).
Contrarily, an ETF approval might have Ethereum completely dismiss its rising wedge setup in favor of an ascending triangle reversal pattern.
The triangle's upside target could reach nearly $3,870 by March, escalating 75% from current price levels, and coinciding with the 0.786 Fibonacci line.
This article is not intended to provide investment advice or recommendations. Every investment and trading move involves risk. Readers should investigate thoroughly before making a decision.
Published At
1/7/2024 4:24:29 PM
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