Trade Of The Week: Are Ethereum ETF’s coming?

• Bitcoin halving done and dusted

• Ethereum in focus ahead of SEC decision

• ETH ↓ 20% from 2024 peak

• Prices trending higher on D1 chart

• Key levels at 100 day SMA, $3255 and 50-day SMA

Bitcoin’s halving event is done and dusted! Marking a landmark moment in the world of digital assets.

This shifts our focus towards Ethereum which could be rocked by the Securities and Exchange Commission’s (SEC) looming decision to vote on Ethereum spot ETF applications.

The world’s second-largest cryptocurrency has shed over 20% from the 2024 high, though still up 40% year-to-date.

Fun fact: Ethereum hit an all-time high of $4866.4 in November 2021.

The lowdown

One of the key forces supporting Ethereum in Q1 was growing anticipation over a green light from the SEC on May 23rd following the spot Bitcoin ETF approval in January.

Fast-forward to today, confidence has significantly declined over the SEC approving the ETF applications.

The bigger picture

Just like we have seen with Bitcoin ETFs, the approval of an Ethereum ETF would increase exposure to the cryptocurrency.

It will provide easier and greater access to the world’s second-largest digital currency without having to own it – representing potential inflows of new investors.

Where we are now

Much has changed since the start of 2024 with the lack of engagement between the SEC and applicants sapping confidence over the possibility of an approval on May 23rd.

On top of this, recent news about the SEC investigating companies associated with the Ethereum Foundation adds another layer of uncertainty ahead of the decision.

A bright spot

Hong Kong regulators have recently approved Bitcoin and Ethereum ETFs, marking another positive step towards mainstream acceptance.

Such a development could spark acceptance from other regulators in Asia and across the world.

What does this all mean?

In a nutshell, Ethereum prices could turn volatile over the next few weeks as the SEC decision looms.

Where there is volatility, this presents potential trading opportunities.

How to take advantage of this

There are 2 potential outcomes to the SEC’s spot ETF decision on May 23rd.

  1) SEC rejects all Ethereum ETF applications.

This seems to be the expected outcome for markets with the approval seen later in the year or even 2025. Nevertheless, the initial disappointment could hit Ethereum prices – capping upside gains from other forces.

  2) SEC approves Ethereum ETF applications.

This decision may catch markets by surprise, triggering an aggressive appreciation in Ethereum prices due to the prospects of fresh inflows from retail and institutional investors.

What about the technicals?

The technicals paint a mixed picture on the daily charts. Although Ethereum is respecting a bearish channel, support can be found at $2855 and the 100-day Simple Moving Average.

• A solid breakout and daily close above $3255 may open a path toward the 50-day SMA at $3475 and $3724.

• Should prices slip back below the 100-day SMA at $3063.8, this could open a path back towards $2855. A solid bearish move under $2855, could fuel a further selloff towards the 200-day SMA.