Legal issues remain a concern for investors
Ethereum (ETH), the second-largest cryptocurrency, has weakened from its recent highs, and broader regulatory uncertainties surrounding Ethereum may continue to impact investor confidence. While the SEC’s approval of spot Ether ETFs was seen as a milestone for the industry, some analysts argue that this decision does not confirm Ethereum’s status as a security.
The SEC’s approval, announced on May 23, 2024, marked a major development, with asset managers such as Grayscale, Fidelity, and Bitwise receiving approval to list their spot Ethereum ETFs on U.S. exchanges. However, these ETFs will not begin trading immediately, as the next steps involve obtaining the required S-1 registration statements from the SEC.
The timeline for when these ETFs will begin trading depends on how quickly the issuers respond to the SEC’s comments and complete the necessary paperwork, which could take anywhere from a few weeks to several months. On June 19, 2024, the SEC surprised the crypto community by officially closing its investigation into whether Ether (ETH) should be classified as a security.
The need for a clear regulatory framework in crypto
Carol Goforth, a professor of business associations and securities regulation at the University of Arkansas, pointed out that the SEC’s approval of a spot Ether ETF does not confirm that ETH is a security, which contributes to the uncertainty for investors.
Goforth speculates that the SEC may have concluded it would be difficult to prove that ETH meets the criteria for being classified as a security under the Howey investment contract test, due to its widespread distribution and the influence of market forces on its profitability. She noted that the SEC might have wished to avoid a potential defeat on the matter, given previous statements by SEC officials about the classification of Ether.
The crypto industry has long complained that the SEC has failed to provide consistent guidance on how the Howey test applies to Ethereum. Crypto analysts argue that the industry needs a clear regulatory framework. The rapid evolution of blockchain technology and the proliferation of various cryptocurrencies have made it challenging for regulators to keep up with developments.
Technical analysis for Ethereum (ETH)
Ethereum (ETH) has declined from $3,973 to $3,351 since May 27, 2024, and the current price is $3,524. Despite this correction, traders should note that as long as ETH stays above the trendline indicated on the chart below, there is no significant risk of a major sell-off, and the cryptocurrency remains in a “BUY” zone.
Key support & resistance levels for Ethereum (ETH)
Looking at the chart from January 2024, I’ve marked significant support and resistance levels that can help traders predict where the price might go. Ethereum is currently trading below its recent highs, but if the price surpasses $3,800, the next resistance target could be $4,000. The key support level is $3,200, and if Ethereum breaks this level, it would signal a “SELL” signal, with potential to drop to $3,000. A further decline below $2,800 could lead to a target around $2,500 or even lower.
Factors supporting a rise in Ethereum (ETH) price
Several factors could drive an increase in Ethereum’s price, including regulatory developments, technological upgrades, market trends, and broader economic conditions. The continuous development and implementation of Ethereum upgrades, along with the rapid growth of decentralized finance (DeFi) applications running on Ethereum, may help increase its value.
Crypto analysts often keep a close eye on the activities of crypto whales, as large transactions can have a major impact on market sentiment. An increase in large transactions for Ethereum could act as a bullish signal, potentially attracting additional buyers.
Indicators of a decline in Ethereum (ETH) price
Market sentiment can turn negative due to macroeconomic factors, geopolitical events, or adverse news surrounding Ethereum or the broader cryptocurrency market, leading to a price drop.
Competitor blockchain platforms like Binance Smart Chain, Solana, and Cardano, which offer similar or superior features (such as higher scalability and lower fees), could divert users and developers from Ethereum. Ethereum’s critical support level is $3,200, and if the price falls below this point, the next support could be around $3,000.
Андешаҳо аз таҳлилгарон ва коршиносон
Crypto analysts agree that while Ethereum has strong fundamentals and a solid ecosystem, it is still vulnerable to various risks that could cause its price to decline. Carol Goforth, mentioned earlier, highlighted that the SEC’s approval of a spot Ether ETF does not confirm Ethereum’s classification as a security, which has added to current investor uncertainty.
Analysts have outlined two scenarios for Ethereum in the near term: If the price remains above $3,500, the bullish trend could continue in line with the current cycle. Conversely, if Ethereum breaks the $3,200 support level, further declines are possible, and a drop below $3,000 would not be surprising.
Радди: Crypto is highly volatile and may not be suitable for all investors. Never risk money you cannot afford to lose. The information provided is for educational purposes only and should not be construed as investment or financial advice.
