TL;DR
- Ethereum has failed to surpass $4,000 despite the approval of eight Ethereum-based ETFs by the SEC.
- The market reaction suggests a “sell on the news” phenomenon after the major announcement.
- In the last day, Ethereum has fallen 3.44%, but has gained 20.37% in the last week.
Despite the historic approval of eight Ethereum-based exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC), Ethereum (ETH) has failed to surpass the $4,000 threshold.
Following the SEC announcement, Ethereum‘s price briefly rose to nearly $3,900, but quickly stabilized around $3,800.
According to CoinMarketCap, Ethereum is currently trading at $3,711.34, reflecting a decline of 3.44% in the last 24 hours, although it has recorded a significant gain of 20.37% in the last seven days .
Market behavior suggests a phenomenon known as “selling on the news,” where prices fall after major announcements as investors take advantage of the initial spike.
Cryptocurrency analyst Jason Pizzino commented that despite the approval of ETFs, the price of Ethereum did not exceed expectations and the ETH/BTC pair also saw a weaker than expected rally.
BREAKING NEWS NINE HOURS AGO: #ETH ETF IS APPROVED. (9 hours is so long that ETHETF isn't even treading anymore, oh crypto, lol)
Happy Friday, guys! 🥳
— Jason Pizzino 🌞 (@jasonpizzino) May 24, 2024
Reaction within the broader Ethereum ecosystem was mixed.
For example, Pepe reached a new all-time high of $0.00001576 after the ETF approvals, but then fell more than 8%.
Arbitrum (ARB) was also down more than 3% after an initial rise.
In contrast, Lido DAO (LDO) defied this trend and advanced more than 12% in the last 24 hours.
This “sell on the news” pattern had already been observed before, especially after the SEC approved spot Bitcoin ETFs, leading to a Bitcoin price drop of over 20%.
Impact of Ethereum and Importance of ETFs
The SEC’s recent approval of ETFs marks a significant shift from its previous, more reticent stance.
With rumors of imminent approvals, fund managers rushed to adjust their presentations.
ETFs simplify the investment process for everyday investors by allowing them to buy stocks that are traded on stock exchanges and track the price of the underlying assets.
For traditional investors, these funds provide a regulated and easy entry into the cryptocurrency market, eliminating the need for technical knowledge related to directly buying, selling and storing crypto assets.
Although the approval of Ethereum-based ETFs represents an important milestone, the market’s cautious reaction indicates that such news alone may not be enough to boost the price of Ethereum beyond significant thresholds such as $4,000.
The phenomenon of “selling on the news” continues to influence market dynamics, highlighting the complex interplay between regulatory developments and investor behavior in the cryptocurrency market.
As ETFs integrate into the market, we are likely to see greater long-term stability, although short-term fluctuations will continue to be a prominent feature of the crypto market.
