Will Ethereum (ETH) Prices Plunge After Spot ETF Begin Trading?

The cause for optimism follows the rapid shift by the United States Securities and Exchange Commission (SEC) to approve the first spot Ethereum exchange-traded fund (ETF) in the country.

Ethereum (ETH) price analysis shows minimal gains last week despite the monumental news of the first spot Ethereum exchange-traded fund (ETF) in the United States being approved by the Securities and Exchange Commission (SEC).

However, ETH price action is slipping after printing higher highs over the weekend. Considering price action, the coin is up roughly 5% from last week’s lows but is still trending below the all-important resistance at $3,700.

While ETH holders and traders are upbeat, prices must decisively close above this liquidation level, paving the way for more gains in short to medium term.

After a seven-month delay, the SEC has finally given the green light to a spot Ethereum ETF, which will begin trading on May 24. This development marks a significant milestone for the cryptocurrency industry and could have a major impact on ETH price.

On a technical note, ETH price action seems to be slipping after a weekend rally that saw the second-largest cryptocurrency by market cap attempt to reclaim the $3,700 level. However, a glance at the 1-hour chart shows ETH price action slipping below this crucial resistance once again.

Currently, ETH price is trading at $3,670, showcasing a 0.24% decrease over the past 24 hours and a 5.33% gain over the past seven days. Notably, ETH price is also up 36.66% year-to-date.

On the other hand, the Grayscale Ethereum Trust (ETHE) discount has also narrowed significantly in recent weeks, which could further cushion any potential sell-off. Grayscale is expected to convert its Grayscale Ethereum Trust into a spot ETF after the product begins trading.

After the SEC approved all 19b-4 forms on May 10, the product could go live and be accessible to investors and institutions in two weeks.

While there are concerns that the approval of the spot Ethereum ETF could lead to another wave of lower lows, as seen with the spot Bitcoin ETF in January, one analyst is stepping in to reassure holders.

Taking to X, the analyst pointed out that the potential impact of Grayscale selling its Ethereum holdings (ETHE) once spot ETFs go live would be minimal, providing stability and confidence in the market.

This preview concerns ETH’s current state of affairs and the broader Ethereum ecosystem. The market wasn’t prepared for the United States SEC to fast-track the product’s approval this year.

In Bitcoin’s case, prices rose sharply from mid-October as the markets anticipated the spot ETF going live in January. Once launched, it became a “sell the news” event, briefly pushing down prices.

Meanwhile, Ethereum prices are turning lower after marked gains posted on May 20 when news permeated to the community of the United States SEC’s last-minute efforts.

At the same time, the analyst highlighted that, unlike Grayscale’s GBTC before the approval of spot ETFs, the discount in ETHE is narrow and within the 1-3% range. Currently, Grayscale manages over $10 billion of ETHE.

The tiny discount suggests that traders who bought ETHE for the discount have had sufficient time to sell at near market price. As such, it means that even once a spot Ethereum ETF goes live, any selling pressure would be minimal.

Still, only time will tell whether ETH will soar or plunge in the next two weeks. From a regulatory perspective, the clarity that results after the spot Ethereum ETF is released could spark demand, allowing more institutions to gain exposure.

K33 analysts predict the product will attract between $3.1 billion and $4.8 billion in net inflows within the first five months of trading

News source：https://www.kdj.com/cryptocurrencies-news/articles/ethereum-eth-prices-plunge-spot-etf-trading.html

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