Ethereum price is down today after fading hope for a spot Ethereum ETF approval in May, and a bearish technical setup stands out as a factor in ETH’s correction.
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Collect this article as NFTEther (ETH) price is down today, dropping more than 6.7% between April 24 and April 25 to trade near the $3,100 level. Ether’s price action has mirrored Bitcoin’s (BTC), which slid below $63,000 on April 25, dropping 6.5% over the same time period.
The decline in Ether’s price can be attributed to surging liquidations in the broader crypto derivatives market, declining hopes for a spot Ethereum ETF approval in the United States, and Ether’s bearish technical setup.
Chances for a spot ETH ETF drop
TheU.S. Securities and Exchange Commission’s (SEC) approval of spot Bitcoin exchange-traded funds (ETF) on Jan. 11 sparked optimism among investors that a spot ETH ETF approval would follow.
There are several spot Ethereum ETF applications before the SEC, which is expected to deliver a decision by May 23, which is the statutory deadline. In January, the regulator delayed a decision on Grayscale’s application to convert its Ethereum trust product (ETHE) into an ETF. It also delayed a decision on applications for an Ethereum ETF from BlackRock and Fidelity in early March as May emerged as the month to watch.
The latest development is that the SEC is most likely to deny a spot Ether ETF in May.
According to an April 24 Reuters report, U.S. issuers and other firms expect the SEC to reject spot Ether ETF applications next month following unsuccessful meetings with the regulator in recent weeks.
Citing people who participated in the meeting, the report explained that recent meetings between issuers and the SEC have been one-sided, and agency staff have not discussed substantive details about the proposed products.
Many industry professionals have become increasingly doubtful of a spot Ethereum ETF approval in the U.S.
OKX cryptocurrency exchange president Hong Fang reportedly said that doubts surrounding spot Ether ETF approvals would add sell-side pressure on Ether’s price.
Fang said,
“There’s more downward pressure on prices as people build that expectation in.”
Bloomberg senior ETF analyst Eric Balchunas previously estimated the chances of the SEC approving a spot Ether ETF in May to be around 35% in March. He also responded to the news by Reuters, saying the report has affirmed what “we’ve been saying: the SEC hasn’t engaged, no comments, no nothing. Radio silence = violence.”
In an earlier post on X, Balchunas said he remains “pessimistic” on SEC’s approval of spot Ethereum ETFs.
Futures liquidations accompany Ether’s correction
Ether’s price decline was followed by an uptick in liquidations in the altcoin’s derivatives market.
According to Coinglass data, over $45.36 million in Ether long positions have been liquidated in the past 24 hours, with $17.31 million wiped out in the previous 4 hours. Meanwhile, a total of $261.96 million in leveraged positions has been liquidated across the crypto market, with $226.7 million being long positions.
When long positions are liquidated, the asset held is automatically sold in the market. If a significant number of liquidations occur simultaneously, this can cause a substantial increase in the supply of the asset being dumped onto the market, pushing prices even lower.
Related: 3 reasons why Ethereum (ETH) price could hit $4K in the short-term
Is Ether’s bear flag a sign of things to come?
ETH price pulled back from a high of $3,227 on April 9 as bears booked profits and the wider crypto market corrected. Ether sank 23.53% in a drawdown that was stopped at the $2,850 demand zone. The price has since recovered to the current price of $3,134.
Despite the recovery, the appearance of a bear flag on the daily chart suggests that the downside of the smart contract token is not over.
Ether bulls are counting on support from the flag’s lower boundary at $3,091, embraced by the 50-day exponential moving average (EMA). A daily candlestick close below this level would signal a bearish breakout from the chart formation, projecting a decline to $2,381. Such a move would bring the total losses to 24%.
The relative strength index’s (RSI) position below 50 indicated that the market conditions favored the downside.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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