Ethereum, the largest altcoin by market value, has once again fallen to the $3,000 range today, while Bitcoin stands at $63,500. After hitting a low, Bitcoin’s price increased by 15% but failed to find the support needed for further gains. For a long time, the BTC price has considered the $65,000 to $67,000 range as resistance.
Ethereum (ETH)
Today, the Ether price has fallen 6.2% from yesterday’s peak to $3,022. At the time of writing, the price is at $3,075. Bitcoin also turned from its peak, and losses exceeding 3% across altcoins are notable. The drop in ETH specifically creates a negative environment that affects the risk appetite in altcoins.
Earlier this year, while the SEC had not yet clearly opposed ETH ETF applications, we discussed the massive gains altcoins could achieve with potential approval. However, over the months, the ETH price has melted due to SEC sanctions, Wells Notices, and statements confirming a negative approach. Bulls that had normalized the $4,000 level are now struggling to maintain the $3,000 level.
The SEC’s decision to delay the verdict on the spot Ethereum ETFs proposed by Invesco and Galaxy Digital was also one of the reasons for the recent downturn.
Will Ethereum’s Decline Continue?
The SEC has begun to imply that Ethereum’s consensus mechanism’s shift from proof-of-work (PoW) to proof-of-stake (PoS) transforms it into a security, an investment contract. This implication has now moved beyond mere suggestion, and various legal steps are being taken. Gary Gensler argues that cryptocurrencies that allow staking also meet the conditions of the Howey test and thus should be under their control and supervision. However, the situation is different for PoW assets like LTC, DOGE, BTC.
Yesterday, the SEC also sent a Wells Notice to Robinhood. The warning sent to Robinhood about its cryptocurrency operations in the US indicates that potential violations are being investigated and that a lawsuit will soon be filed.
Putting all these together, there is a potential for the SEC’s current stance to change through court intervention, similar to the BTC ETF process. However, this is unlikely to happen immediately. On May 23, the SEC must decide to approve or reject ETH ETFs. Given the agency’s actions over the past few months, a rejection decision would not be surprising. Even if a new application is made, the earliest ETF approval could come by November 2024.
