Ethereum's (ETH) price movement on Monday reveals traders' uncertainty following Grayscale CEO's departure and expectations that the Securities & Exchange Commission (SEC) would deny applications for spot ETH ETFs this week.
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Ethereum is expected to experience increased volatility this week as the market anticipates the SEC's response to spot Ethereum ETF applications. SEC must decide whether to approve or deny Van Eck's spot Ethereum ETF application on May 23 and the Ark 21Shares Ethereum ETF application on May 24.
In an X post, Nate Geraci, President of the ETF Store, gave insight into the SEC approval process of ETFs and how it would affect the upcoming decisions. He stated that the SEC must approve both 19b-4s (exchange rule changes) and S-1s (registration statements) for an ETF to launch.
19b-4s is the filing that national exchanges like NASDAQ or the New York Stock Exchange (NYSE) submit to the SEC to seek approval for listing a new product on their trading platforms. In the context of ETFs, S-1s refer to the initial registration forms detailing how a fund would be managed and track the underlying asset's price.
Geraci says it's "technically possible for SEC to approve 19b-4s & then slow play S-1s," considering their reported lack of engagement.
Also read: Ethereum drops below $3,000 again, spot ETH ETF sparks debate in crypto community
Meanwhile, Grayscale CEO Michael Sonnenshein has stepped down, according to a report from The Wall Street Journal. Peter Mintzberg, head of strategy for Goldman Sachs's asset and wealth management division, will take over as new CEO in August.
Sonnenshein also confirmed his departure from the digital asset management firm in an X post on Monday. This follows Grayscale's withdrawal of its application for a futures Ethereum ETF earlier in May.
I leave @Grayscale with deep gratitude for everyone who has been on this incredible rocket ship journey. @BarrySilbert, thank you for taking a bet on me and for your partnership these last 10 years. To the Grayscale Leadership Team - thank you for your dedication, loyalty, and…
— Sonnenshein (@Sonnenshein) May 20, 2024
With both events coming only a few days before the SEC decides on Ethereum ETF applications, many crypto community members have further increased their odds of the agency denying issuers. Additionally, this has lowered investors' expectations of Grayscale pursuing a legal battle — like it did with Bitcoin ETFs — if the SEC denies its spot Ethereum ETF application.
Ethereum is trading near $3,083 on Monday, seeing a slight correction from its weekend peak of $3,147. With the SEC's decision on Van Eck's spot ETH application coming on Thursday, investors should watch out for high volatility.
The $3,029 support may prove key in the next few days before the event. A dip below the support indicates a high bearish sentiment from expectations that the SEC will deny the application. However, it may prove a good buy opportunity in case of a surprise SEC approval.
Read more: Week Ahead: Ethereum and DeFi to come under spotlight this week
According to QCP, "Given the resounding lack of interest in the market, the risk is to the topside with a surprise approval catching everyone off guard, triggering a short squeeze taking us easily back to recent highs."
ETH/USDT 4-hour chart
A denial of spot ETH applications may not trigger a wide dip, however, as ETH's poor price performance since April indicates that a denial is already priced in. ETH may not sustain any decline below the $2,914 to $2,852 range as it has shown strength in weathering dips within the past three months.
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.