Ethereum Stalls Around $4,000 as Spot ETF Approval Hopes Dwindle

Ethereum (ETH) has been trading sideways in the vicinity of $4,000, despite the recent surge in Bitcoin (BTC) to a new all-time high. This stagnation coincides with a significant decline in optimism surrounding the approval of a Spot Ethereum Exchange-Traded Fund (ETF) by the U.S. Securities and Exchange Commission (SEC) before the anticipated May deadline.

Decreasing Odds for Spot Ethereum ETF Approval

Top analysts, including Eric Balchunas of Bloomberg Intelligence, have drastically revised their forecasts for Spot Ethereum ETF approval. Balchunas initially predicted a 70% chance of approval by May, but now estimates the odds at a mere 35%.

Several factors, according to these analysts, are contributing to the SEC’s apparent hesitation, leaving the future of Spot Ethereum ETFs uncertain.

Ethereum vs. Bitcoin ETF Approval Cycles

Analysts like James Seyffart of Bloomberg Intelligence point out a key difference between the approval cycles for Bitcoin and Ethereum Spot ETFs. Unlike Bitcoin, where optimism grew closer to the approval date, Ethereum’s approval prospects seem to be diminishing over time.

Limited Impact of Spot ETF Approval on Ethereum Price

Some analysts argue that a potential rejection of Spot Ethereum ETF applications might not significantly impact the price in the near term. On-chain analysis suggests limited “whale activity” accumulating ETH in anticipation of an ETF approval, unlike the behavior observed before the Bitcoin ETF approval.

Ethereum’s price appears to be influenced by a broader market sentiment, including Bitcoin’s rally and the return of cash liquidity to the crypto market.

Dencun Upgrade: A Beacon of Hope?

Ethereum’s upcoming Dencun upgrade, scheduled for March 14th, is seen as a significant event, potentially attracting more users to Layer 2 (L2) networks. Dencun is expected to usher in lower gas fees on L2 solutions like Polygon, Arbitrum, and Optimism.

While not directly impacting ETH price, this upgrade might enhance Ethereum’s scalability and contribute to its long-term growth, as predicted by JPMorgan analysts.

ETH/USD Technical Analysis

• Current Price: $4,016
• Resistance Levels: $4,200, $4,400, $4,600 (psychological level)
• Support Levels: $3,800, $3,600, $3,400
• Moving Averages: ETH is currently trading slightly above its 9-day and 21-day moving averages, indicating a possible short-term uptrend. However, the lack of significant upward momentum suggests a potential continuation of sideways trading.
• Relative Strength Index (RSI): The RSI is currently at 58, indicating neutral territory. This suggests that the price is neither overbought nor oversold, but a breakout in either direction could be imminent.