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CryptoQuant cautions about potential Ethereum price adjustment and volatility if ETF approvals fluctuate.
On-chain analytics company CryptoQuant cautioned that ETH prices may experience volatility if there are uncertainties surrounding pending spot Ethereum ETFs.
It indicated that ETH could face a “substantial price correction” if the SEC rejects ETH ETF applications or postpones the approval timeline.
Moreover, significant exchange flows could lead to ETH price fluctuations in the upcoming days. Amid speculation regarding pending spot ETH ETF approvals, exchange flows reached 62,000 ETH, the highest level since March.
Upward price pressure
Despite potential declines, ETH prices have increased over several days following speculation that the SEC will approve spot ETFs related to the digital asset.
As of May 22, Ethereum was trading at $3,735, reflecting an approximate 21% rise over 24 hours, according to CryptoSlate data.
CryptoQuant noted that traders exerted upward price pressure by actively opening long positions in the futures market in anticipation of rising prices, which elevated ETH open interest from 2.8 to 3.2 million ETH, the highest since January 2023.
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This activity led to a short squeeze and a series of short liquidations.
Long-term ETH holders, or accounts that retain but do not sell ETH, also contributed to upward price pressure by acquiring a substantial amount of ETH. These holders purchased over 100,000 ETH in a single day, the largest daily total since September 2023.
Buy orders are prevalent in the ETH perpetual futures market, with a taker buy/sell ratio exceeding one, further intensifying market pressure.
ETH short position liquidations reached 9,300 ETH, marking the highest hourly volume in 2024 and triggering a short squeeze in futures markets.
Applications pending
The SEC is set to make a decision on VanEck’s spot ETH ETF proposal on May 23, but it may address similar applications concurrently.
The approval process remains ongoing. On May 21, Cboe submitted 19b-4 rule changes on behalf of five ETH ETF issuers. Nasdaq has also revised 19b-4 filings for BlackRock, while NYSE Arca has updated filings for Grayscale’s Ethereum Mini Trust and Bitwise’s application.
FOX Business reporter Eleanor Terrett mentioned that the SEC and issuers are now engaging in discussions regarding S-1 registration statements. Bloomberg ETF analyst James Seyffart believes that funds may not be launched for weeks or months following initial approvals.
The post CryptoQuant warns of Ethereum price correction, volatility if ETF approvals waver appeared first on CryptoSlate.
