Ethereum, the second-largest cryptocurrency by market capitalization, faced a notable downturn in price trajectory, declining by over 6.7% between April 24 and April 25. Trading near the $3,100 level, Ether’s movement echoes that of Bitcoin, which experienced a 6.5% drop below $63,000 during the same period.
Several factors have contributed to the recent decline in Ethereum’s price. Firstly, heightened liquidations in the broader crypto derivatives market have exerted downward pressure. Additionally, hopes for the approval of a spot Ethereum exchange-traded fund (ETF) in the United States have waned, further impacting sentiment surrounding Ether.
The optimism initially sparked by the U.S. Securities and Exchange Commission’s (SEC) approval of spot Bitcoin ETFs in January has dwindled regarding a similar approval for Ethereum. Despite expectations for a decision by May 23, recent meetings between issuers and the SEC have not yielded positive outcomes, with insiders suggesting a likely rejection of spot Ether ETF applications next month. The lack of substantive discussions and engagement from regulatory authorities has fueled skepticism within the industry regarding the prospects of ETF approval.
Industry experts, including OKX cryptocurrency exchange president Hong Fang and Bloomberg senior ETF analyst Eric Balchunas, have expressed doubts about the likelihood of SEC approval for spot Ethereum ETFs in May. Balchunas highlighted the radio silence from the SEC as indicative of the regulatory uncertainty surrounding Ethereum ETFs.
In tandem with these regulatory uncertainties, Ether’s price correction has been accompanied by a surge in liquidations in the altcoin’s derivatives market. Coinglass data reveals significant liquidations of Ether long positions, contributing to the downward pressure on prices.
Technical analysis indicates the emergence of a bear flag on Ethereum’s daily chart, suggesting potential further downside. While Ether has shown some recovery from recent lows, the presence of the bear flag, coupled with the Relative Strength Index (RSI) positioning below 50, signals a prevailing bearish sentiment in the market.
Ether bulls are closely monitoring key support levels, particularly the lower boundary of the bear flag at $3,091, supported by the 50-day exponential moving average (EMA). A breach of this support level could signal a bearish breakout, potentially leading to further declines towards $2,381, representing a total loss of 24%.
As Ethereum navigates through regulatory uncertainties and technical indicators, market participants remain vigilant for further developments that may impact the cryptocurrency’s price trajectory.
