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While the crypto space is excited over the potential approval of spot Ethereum ETFs analysts caution that this may not lead to the major price spike that many are anticipating for the altcoins king.
As of writing today June 20th 2024 Ethereum is trading at $3,580.52 up by 1.13% in the last 24 hours. Its market cap sits at $438.5 billion while the 24-hour trading volume is $13.9 billion, but as s decline of 29% in the same timeframe.
The hype around ETH ETFs was catalyzed by the SEC closing its investigation into Ethereum 2.0 indicating they do not view Ether as a security. This has paved the way for ETF issuers to file for spot Ether funds.
ConsenSys which a major Ethereum developer called the SEC decision a "major win" after the company had filed a lawsuit alleging the agency plan to bring an enforcement action against Ethereum 2.0 contributors and traders.
However the SEC did not explicitly declare ETH as a commodity, leaving some lingering regulatory uncertainty. This ambiguity coupled with intensifying recession fears may be suppressing institutional demand for a spot ETH product.
While Ethereum remains the leader in decentralized app (dapp) volume also, it has faced competition from blockchains like Solana, BNB Chain, Aptos and others. Ethereum dapp volume and active user metrics have declined recently while rivals have seen sharp growth.
This competitive pressure from newer chains could dampen enthusiasm and demand for an Ethereum ETF product from larger investors.
From a technical analysis the outlook for ETH appears somewhat bearish in the after the recent breakdown from a bullish flag pattern.
On the daily chart Ethereum price broke down impulsively from a ranging channel on May 20th leaving a large unfilled gap which analysts view as an area of high demand around $3,100.
Currently the 100 and 200 EMAs on the 4-hour chart at $3,621 and $3,650 respectively are acting as resistance levels. In the short term the price is trading towards a resistance level at $3,649. A revisit down to the $3,100 demand zone seems likely before any larger upside continuation can be witnessed.
The 4-hour RSI at 56 indicates more potential for good recovery. Overall the technical picture aligns with the bearish fundamental view that ETH may continue struggling despite the ETF optimism.
While Ethereum market cap and daily volume remain very high compared to other cryptos some key metrics have turned bearish. The daily active Ethereum addresses interacting with dapps down 40% over last 30 days. Competitors like Solana (+58%) and Aptos (+115%) are seeing much faster dapp user growth
The stagnating dapp metrics illustrate Ethereum intense competition from other smart contract platforms. And the elevated implied volatility may be a sign that institutions are cautious on ETH near-term outlook, even with ETFs on the horizon
While the prospect of spot Ethereum ETFs is certainly bullish long-term, there are numerous fundamental and technical headwinds that could keep a lid on ETH price for the time being.
