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The cryptocurrency market is experiencing widespread sell-offs, and Ethereum (ETH), the largest altcoin, is also under some selling pressure. Currently, it is trading at $2,421, a 2.02% decrease, with a market value of $291 billion. Let’s take a closer look at what’s next for ETH.
ETH Price Above Key Demand Zone
Experienced cryptocurrency analyst Ali Martinez shed light on the current state of Ethereum in a recent market update. The analyst emphasized that ETH continues to stay above a significant demand zone ranging between $2,388 and $2,460. According to Martinez, the strength of this support level will determine Ethereum’s trajectory in the short term, and the most optimistic scenario suggests a potential upward direction due to minimal resistance.
However, Martinez also issued a cautionary note, indicating potential downside if ETH fails to stay above this support. In this scenario, a pullback to the next significant support level, estimated to be around $2,000, could occur.
Key Developments for Ethereum
Ethereum’s eagerly awaited Dencun update is scheduled to be deployed on the Sepolia test network by January 30, with the corresponding update on the Holesky test network planned for February 7. A blog post set to be published on January 23 is expected to provide comprehensive information on client versions for both updates and detailed information to stakeholders about the activation process of the relevant test networks.
On the other hand, there is optimism that the SEC will approve Ark 21Shares’ application for a spot Ethereum exchange-traded fund (ETF) by the final deadline of May 23. Despite this optimism, investment bank JPMorgan has made a notable analysis, suggesting that the likelihood of the US regulator approving the ETF by May is less than 50%.
Last year, the narrative of a spot Bitcoin (BTC) ETF’s rise and subsequent approval turned the spotlight on Ethereum as the next logical candidate for spot ETF approval in the US. According to JPMorgan, this expectation is reflected in the discount to the net asset value (NAV) of the Grayscale Ethereum Trust (ETHE), which has been contracting since the summer of 2023 and has stabilized at around 12% over the last two months.
JPMorgan notes that some interpret the SEC’s decision not to reference ETH in a lawsuit against cryptocurrency exchanges for securities law violations as an indication that the regulator may be inclined to classify the altcoin as a commodity in the coming months, a crucial condition for spot ETF approval. Others claim that the approval of ETFs based on Ethereum futures last September suggests that ETH is naturally considered a commodity.
