By
Svetlana Soroka
May 18th, 2024
Traders’ optimism concerning the Ethereum exchange-traded fund’s approval has dwindled, contributing to the coin’s turbulent price.
Ethereum (ETH) has been experiencing a slump in price in the past three days, with the coin closing in red and dipping by 7.5% so far. The price closed at $3,051 on Monday and plunged further to $2,999 yesterday. This continuous drop in the value of the second-largest cryptocurrency has been triggered by the activities of large investors who have been dumping the coin for other tokens, causing a shift in market sentiment.
Whales Shift Funds Away from Ethereum (ETH)
A report by LookOnChain, an on-chain data analyst, revealed that a particular whale, Machi Big Brother, spent 661 ETH, which is equivalent to $2.05 million, to purchase another coin, FRIEND, at 798,157; the report went on to reveal that this is not the first time the large investor will be doing that. Similarly, another whale wallet spent 384 ETH, equal to $1.2 million, to buy 423,196 FRIEND. Dumping ETH for another crypto shows the lack of trust in the future of Ethereum by some investors.
Just yesterday, Grayscale, a crypto asset management company, revealed its decision to withdraw its application for the Ether futures exchange-traded fund (ETF), barely three weeks before the Securities Exchange Commission (SEC) decided on the future of the ETH ETF.
This decision by the company has sent fear to some ETH traders, as the liquidation chart on Coinglass shows that traders are worried that the price of the coin is going down in the near term; it also revealed that the trading volume of the coin as of the time of writing has dropped by 17.34%.
Traders’ Optimism Wanes as Deadline Approaches
Traders’ optimism concerning the Ethereum exchange-traded fund’s approval has dwindled, contributing to the coin’s turbulent price. Initially, investors’ anticipation of an ETF approval increased after Bitcoin ETF applications were accepted in January. However, a poll conducted by Polymarket, a New York-based prediction market, revealed that only 7% of its participants believed the ETH ETF would be approved by May 31. This data reveals further how much the optimism surrounding the ETH price spike following a potential ETF approval has reduced.
Ash Crypto, a top crypto trader, and analyst, predicted that the price would break out and start a journey to $15,000 by the third quarter of this year; he cited how the current price action is similar to the pattern observed in the fourth quarter of 2020. His chart suggested that should ETH break out from the resistance level around $3,900, it would potentially spike by more than 300% its value and affect other altcoins. Theoretically, this is how an altcoin season starts, as many investors get more confidence to buy other tokens since the biggest altcoin is rallying.
However, with Grayscale throwing in the towel even before the approval and some large investors already considering depositing their funds in different tokens, we might have to wait for longer to see if a decisive altcoin season will kick in at the key resistance around $3,900, as Ash Crypto has predicted. For now, the price keeps struggling between $2,900 and $3,100, and we need to see a more decisive breakout for the price to rally higher.
More so, the SEC must either deny or approve at least one spot Ether ETF application on May 23. Therefore, the crypto community will be watching the Ethereum market closely in anticipation of what is next.