Ethereum (ETH) Price Stagnates Despite ETF Approval: Is a ‘Sell the News’ Scenario Unfolding?

• The cryptocurrency market has been abuzz with the recent approval of spot Ethereum ETFs by the U.S. Securities and Exchange Commission (SEC).
• Ethereum experienced significant price volatility, leading to substantial long liquidations and a major whale offloading a large amount of ETH.
• Notably, an Ethereum whale sold 7,900 ETH, worth approximately $29 million, amidst the market turbulence.

Discover the latest developments in the cryptocurrency market as Ethereum experiences major price swings following the approval of spot Ethereum ETFs by the SEC.

ETH Price Volatility Amid ETF Approval

The approval of eight spot Ethereum ETFs by the U.S. SEC on Thursday, May 23, has led to significant price movements for Ether (ETH). Despite the initial excitement, the price of ETH has remained relatively stagnant at $3,800, showing no significant upward trend. However, ETH did experience a notable rally of over 30% in the past week. Investors are now cautiously observing whether this development will result in a “sell-the-news” event.

Market Reactions and Whale Activity

Ahead of the U.S. SEC’s announcement regarding the spot Ethereum ETF approval, the ETH price witnessed wild swings. In the tense hour preceding the official approval, ETH initially dropped to $3,500 around the time of the traditional U.S. market close. Subsequently, it surged close to $3,900 upon the emergence of initial unconfirmed reports suggesting approval, ultimately settling above $3,800 after confirmation. Amid these massive price fluctuations, a whale sold a staggering 7,900 ETH holdings worth $29 million.

During this turbulent episode, liquidations of leveraged crypto derivative positions surged to over $350 million throughout the day, marking the highest figure since May 1, according to CoinGlass data. The majority of these liquidated positions were longs anticipating price increases, totaling approximately $250 million. This indicates that traders who had overextended themselves with leverage were taken by surprise by the abrupt price drop. Among the affected, ETH traders bore the brunt, with $132 million in liquidations.

ETH Price Action Ahead?

The approval of the spot Ethereum ETFs could drive more than $500 million in inflows as predicted by analysts. However, this might take some time to realize and kickstart the uptrend. Several on-chain indicators have been pointing out that Ethereum can easily form a base above $4,000 and can continue rallying to $5,000-$6,000 up until August this year. While the approval of the Bitcoin ETFs led to strong institutional inflows, it will be interesting to see whether the Ether ETF launch could lead to greater institutional adoption.

Conclusion

The recent approval of spot Ethereum ETFs by the U.S. SEC has led to significant market reactions, including substantial price volatility and major liquidations. While the immediate price action for ETH remains uncertain, the potential for increased institutional inflows and a solid base above $4,000 could pave the way for a strong rally in the coming months. Investors and traders should closely monitor the market dynamics and be prepared for potential opportunities and risks.