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- SEC delays decision on Ethereum ETF S-1 drafts as analysts shifted their potential launch date again.
- Ethereum whale risks liquidation if ETH declines to $2,984.
- Ethereum breaches key support amid key insight from CME open interest.
Ethereum is down more than 5% on Thursday following the Securities & Exchange Commission’s (SEC) failure to approve ETH ETF issuers’ S-1 drafts. Meanwhile, the recent decline has strengthened the bearish outlook after ETH moved below a key support level, sparking $90 million in long liquidations.
Daily digest market movers: SEC yet to approve ETH ETF
Despite its light comments on issuers’ S-1 drafts, the SEC has yet to approve spot ETH ETFs following the US Independence Day holiday. As a result, Bloomberg analyst James Seyffart shifted his over/under date for a potential approval to next weekend.
The SEC approved spot ETH ETF issuers’ 19b-4 filings in May, but also need to sign off on their S-1s before the products go live.
Nate Geraci, President of ETF Store, noted that the SEC expects issuers to amend their S-1s by July 8, with another round of filings potentially due around July 12. This “would theoretically mean launch week of July 15” for spot ETH ETFs, wrote Geraci in an X post.
Meanwhile, following the recent market decline, a whale who longed ETH via the Compound protocol is about to be liquidated, according to data from Lookonchain. The whale deposited 12,734 ETH worth $40 million to Compound and borrowed $31.4 million worth of dollar-denominated stablecoins with a health rate of 1.06. The whale risks liquidation if the price of ETH drops to $2,984.
ETH technical analysis: Ethereum bears lead market amid slight bullish sentiment from US investors
Ethereum is trading around $3,132 on Thursday, down more than 5% on the day. The decline wiped out more than $90.81 million worth of long positions from the market, bringing the total ETH liquidations to $102.48 million in the past 24 hours.
ETH has now breached the $3,203 key support level, strengthening its bearish outlook. With the move, ETH has fully balanced the market inefficiency from itsprice spike following news of the SEC’s U-turn on spot ETH ETFs.
ETH/USDT 4-hour chart
ETH may test the $3,029 support level in the next few hours. A bounce from this level will cool the bearish momentum. However, a move below it may see ETH seeking support around the $2,852 price level.
In the past 24 hours, Ethereum’s futures open interest (OI) across top exchanges declined by almost 5%. Open interest is the number of outstanding contracts in a derivatives market that are yet to be settled.
While the move signified wider risk aversion from traders, Ethereum’s CME OI was an outlier, rising almost 1% in the last 24 hours. This indicates that US investors may be slightly bullish despite declining prices due to expectations of spot ETH ETFs’ launch.
Another key insight is that spot ETH ETFs may experience impressive flows using the rising ETH CME OI as a proxy to measure investors’ sentiment. As a result, ETH may take bears by surprise and rally past its yearly high, invalidating the bearish thesis.
Ethereum development FAQs
After the Merge, the Ethereum community is looking at the Sharding upgrade next, which has been slated for sometime later in the year. The development can be summarized in four words, “scalability through more efficient data storage.” The software update will increase the capacity of the blockchain, widening the amount of data that can be stored or accessed. At the same time, all services running atop the Ethereum blockchain will enjoy significantly reduced transaction fees.
A fork is the splitting of a blockchain after developers agree and proceed to implement upgrades. The decision comes after these developers reach a consensus for a software upgrade. The ensuing part will see one part continue with the status as is, while the other one will proceed with new features combined with the former ones. A hard fork basically entails permanent divergence of a new side chain from the original one, while a soft fork is doing the same, only difference being that it is temporary.
EIP-4844 is an improvement proposal for the Ethereum network. The upgrade promises reduced gas fees, which is a valuable offering considering the high transaction cost that continues to daunt crypto players. It has been a long-standing concern for the Ethereum network. The proposal is also referred to as “proto-Danksharding,” with an unmatched ability to increase the speed of transactions on the Ethereum blockchain. At the same time, it helps to reduce the transaction cost as everything becomes decentralized.
Gas token is a new, innovative Ethereum contract where users can tokenize gas on the Ethereum network. This means they can store gas when it is cheap and start to deploy the gas once the market has shifted to the north. The use of Gas token helps to subsidize high gas prices on transactions, meaning investors can do everything from arbitraging decentralized exchanges to buying into initial coin offerings (ICOs) early.