Analysts Predict Ethereum Volatility Amid ETF Hype

The narrative surrounding the launch of spot Ethereum ETFs could increase the volatility of the second-largest cryptocurrency by market capitalization, according to several industry analysts.

On May 20, media reported that the SEC requested companies to update form 19b-4 in their applications for the launch of the instrument. Following the news, ETH’s price exceeded $3600.

According to QCP Capital, the regulator’s request “caught a complacent market by surprise.” Experts believe that if the ETF is approved, the asset’s price could rise to $4000 in the short term and later this year to $5000.

QCP Asia/London Colour – 21 May 24

1/ Overnight news took a complacent market by surprise (at least those that didn’t read the #QCP broadcast yesterday)

If approved, this move is far from over with #ETH at 4k as a natural short term target and at 5k for later in the year

— QCP Capital (@qcpcapital) May 21, 2024

In a negative scenario, Ethereum’s price risks falling back to $3000, analysts say.

Over the past day, users of Polymarket increased the odds to 61% for the launch of an ETH-ETF by May 31.

According to a report by Kaiko, traders are currently “crowding around put and call options, suggesting some volatility in Ethereum may be observed by the end of May.”

The clock is ticking on $ETH ETF approval.

Market data suggest traders aren’t optimistic of approval.

Check out our latest debrief for all the trends:https://t.co/Z0BQS4lMr3

— Kaiko (@KaikoData) May 20, 2024

Experts observe that most market participants are pessimistic about the prospects of spot fund approval. This is also indicated by the ETH to Bitcoin ratio, which has been declining since March and is now at 0.046, the lowest since February 2021.

Similar thoughts were expressed by Presto analyst Peter Chang, who predicted increased Ethereum volatility regardless of the decision on the applications.

What’s going on in $ETH market? SEC makes 180-turn on #ETH ETF applications and it may be politically motivated.

Three takeways from our Head of Research, @PC_RedPillTaker:

First, it shows how arbitrary the SEC’s decision-making process is under Gensler’s leadership.

Second,…

— Presto (@presto_labs) May 21, 2024

“The SEC made a 180-degree turn regarding ETH-ETF. This may be politically motivated. Firstly, the situation shows how arbitrary the regulator’s decision-making process is under Gary Gensler’s leadership. Secondly, the consequences extend beyond Ethereum and encompass the entire industry, potentially signaling a shift in the Democrats’ anti-crypto stance,” Chang added.

In his view, the “wake-up call” for digital asset opponents in power was the vote on SAB 121.

Positive Signals

Meanwhile, researchers at Wenmerge noted the increased interest in Ethereum staking.

Activation queue blast off!

88,000 ETH waiting to be activated… pic.twitter.com/NZeAq2DoHY

— Wenmerge?? (@Wenmerge2022) May 21, 2024

At the time of writing, there are about 3500 validators in the queue, having locked over 88,000 ETH.

IntoTheBlock noted that with the rise to $3600, approximately 90% of asset holders are in profit.

Ether’s explosive move to $3600+ puts 90% of $ETH holders in profit. pic.twitter.com/ExkqY89OD1

— IntoTheBlock (@intotheblock) May 21, 2024

According to Coinglass, the total open interest in Ethereum futures reached a record level of $14 billion. Since the beginning of the year, this figure has increased by 40%, indicating growing interest in trading the second-largest cryptocurrency by market capitalization.

Previously, Coinbase analyst David Han called the approval of an Ethereum-ETF a matter of time. According to the specialist, the rationale used for approving a Bitcoin-ETF is also applicable to the instrument based on the second-largest cryptocurrency by market capitalization.

Lawyer Scott Johnson stated that the SEC is examining the grounds for rejecting applications for spot Ethereum-ETFs. In his opinion, one of them could be assigning the asset the status of a security.

Back in April, experts from Standard Chartered joined the camp of skeptics doubting the approval of spot ETH-ETFs by May 23. Analysts cited the lack of constructive dialogue between the regulator and issuers.