How Will Ethereum Price React to Bitcoin ETF Approval?
As the US Securities and Exchange Commission (SEC) deadline for a Bitcoin (BTC) ETF decision approaches on January 10, the market is optimistic about approval. This milestone could have wider implications for the crypto market, including the second largest cryptocurrency, Ethereum (ETH).
Ethereum ETF hopes
Approval of a Bitcoin ETF could set a regulatory precedent to ease the way for other crypto-based ETFs. The rationale is that the approval of a Bitcoin ETF could involve establishing a framework applicable to other cryptocurrencies, including Ethereum.
In the year In December 2023, the SEC delayed its decision on several Ethereum ETF applications pending in the US until May 2024. This includes the Hashdex Nasdaq Ethereum ETF, the Grayscale Ethereum Futures ETF, the VanEck spot Ethereum ETF, and the spot Ethereum ETF provided by Cathy. Wood ARK Invest and 21 shares.
These delays are part of the SEC's process, which involves gathering public input before deciding whether these ETFs should be listed. However, they also appear in the commission's attempt to classify some proof-of-stake (PoS) cryptocurrencies as securities.
Interestingly, Ethereum was not named as a security in the SEC's recent lawsuits targeting crypto exchanges. The commission did not object to Ethereum's classification in the ETF registration process with the Commodity Futures Trading Commission (CFTC).
Here we go…expect more #ehereum ETFs documentation in the coming days.
Note: This is an S-1, not a 19b-4. Which means it won't start a clock anyway…yet. Expect 19b-4 soon. https://t.co/sNus2vr5qV
— James Seyff (@JSeyff) September 6, 2023
That raises the possibility of seeing an Ethereum ETF accepted in the US by May 2024, which could be a boost to the value of ETH.
Ethereum-Bitcoin related
Granting approval of a Bitcoin ETF will not be breaking news, Ether's price is well positioned for a rally due to its consistent correlation with the price of BTC in recent years.
Essentially, this means that the approval of a Bitcoin ETF could trigger a significant increase in crypto exposure among traditional investors. In turn, this could lead to an increase in the price of ETH as the market expects an increase in demand.
The #Ethereum supply problem is getting worse by the day.
The supply is getting tighter every day which shows that the demand for #ETH is getting stronger.
Big profits ahead. pic.twitter.com/k0SQJAUDHW
– Leon Weidman | Insights on the Chain (@LeonWaidman) January 6, 2024
Conversely, delaying or preventing the market from adjusting to the downturn may result in short-term bearish pressure. A recent Bitwise survey found that 39% of US-based financial advisors believe a Bitcoin ETF will be approved this year.
Ethereum price technicians suggest a correction
From a technical point of view, ETH price is trending towards a rising wedge pattern ahead of the Bitcoin ETF decision. A delay or hold-off could result in a price correction to the wedge line near $1,865 through February.
The $1,865 level coincides with ETH's 0.236 Fibonacci line and the 50-week exponential moving average (50-week EMA; red wave).
Related: Key Things to See on the Ethereum Network Roadmap
On the other hand, ETF approval could cause Ethereum to cancel its rising wedge setup entirely.
The triangle's upside target is near $3,870 by March, a 75% upside from current price levels, and coincides with the 0.786 Fibonacci line.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
