Ethereum poised for high volatility as Grayscale CEO departs several days before SEC's ETF decision

• Ethereum ETFs may not see approval as SEC may "slow play S-1s".
• Grayscale CEO confirms resignation with only a few days left before SEC decides on spot Ethereum ETFs.
• Ethereum may test key support levels if spot ETH ETFs are denied.

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.

Read more: Ethereum rallies 5% as Vitalik Buterin responds to criticism from community amid Coinbase ETH ETF prediction

Daily digest market movers: Ethereum ETFs face high odds of denial

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.

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.

ETH technical analysis: Ethereum may test key support levels

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.