At the beginning of the last week of May, the cryptocurrency ether (ETH) exceeded $3,970 and marked a new high in its price since March. This rise occurs while the US Securities and Exchange Commission (SEC) is in negotiations to approve the implementation of spot ETFs of that digital asset. ETH price was in dispute against its nearest resistance which is around USD 4,000. If he managed to overcome this area, he could be on his way to what he achieved in November 2021, when he reached his all-time high at USD 4,891.
In the following chart taken from TradingView, it is seen that ETH is still far from its all-time high:
The market is eager for the implementation of ether ETFs
The horizon of the Ethereum network token is growing for new investors. And it is that the approval of the ether ETF by the SEC generated great expectations in the market and this would cause investors to approach their position to the cryptocurrency created by the Russian-Canadian Vitalik Buterin and in this way boost its price. If it were definitively confirmed, institutions and corporations could land with capital and the companies issuing the ETFs will have to increase the purchase of ether to support the funds. The consequence, due to the law of supply and demand, would be an increase in the price of ETH. When that happens, there is a high chance that ETH will mark a new all-time high.
However, it is worth remembering that the aforementioned regulatory body has not yet issued its final decision and that Details need to be determined for the implementation of the 8 approved investment funds. These funds belong to the companies VanEck, Ark21Shares, Hashdex, Grayscale, Invesco Galaxy, BlackRock and Fidelity. After having granted approval in the first instance, and when the complete delivery of forms and documents called S-1 by those companies still remains, The SEC's final ruling could be known in June 2024.
Ether is the second largest cryptocurrency in the market capitalization, behind bitcoin (BTC). As explained in the educational section of BitcoinDynamic, Criptopedia, Ethereum is the best-known cryptocurrency network for the development of decentralized financial applications. At the same time, it provides the power to create and build digital tokens, smart contracts, exchanges, video games, and the list goes on.
What are ETFs?
ETFs (exchange traded funds) are investment funds that are listed on the stock exchange. They represent an investment alternative since they replicate the price action of another or other assets to which they are subject.
In the specific case of approval of cash funds linked to the Ethereum cryptocurrency, would facilitate access for users of the traditional finance system and that they are catapulted towards cryptocurrencies. In this way, the operation of these ETFs would offer new users the possibility and advantage of entering into an asset without running the risk of exposing themselves to a market of which they do not have full knowledge. On the other hand, as the main disadvantage that is observed in them is that there is no real possession of the asset. What is obtained is an action that replicates the ETH price that is held by a company and that has the decision-making power over that asset. As a consequence, the user is not the actual bearer of the title and could suffer circumstances beyond your choice. Among them, for example, the counterparty cannot comply with its obligations, a blockage of operations, confiscations and even freezing of funds due to judicial investigations. The closest case that can be cited is what happened with bitcoin, since the announcement of its ETF in the US, which took place in January 2024 and which led this cryptocurrency to its new all-time high at $73,700, months later. The launch of these products took place in the Hong Kong markets at the end of April. exchange traded funds bitcoin and ether also. This event produced an initially very positive reaction during those last days of April and the first days of May in the cryptocurrency community.