Ethereum Sees Mixed Signals as ETFs Struggle but Network Upgrades Loom
Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is experiencing a period of mixed signals as various factors influence its price and adoption. Recent developments in ETFs, network upgrades, and market dynamics paint a complex picture for the leading smart contract platform.
Spot Ethereum ETF Woes: Underwhelming Performance in the US Market
The launch of spot Ethereum ETFs in the United States, once heralded as a major milestone, has fallen short of expectations. Since their approval in July, the nine Ethereum ETFs have seen dwindling flows and lackluster performance. Bloomberg Intelligence analyst James Seyffart admitted, “I was so far wrong, I was way too bullish,” during a panel at the Permissionless crypto conference.
Data from Glassnode reveals that Ethereum ETFs have experienced negative daily flows 61% of the time since their inception. Total outflows have reached a staggering $546 million, according to Farside Investors. This disappointing performance stands in stark contrast to Bitcoin ETFs, which attracted $12 billion in inflows during their first quarter alone.
The underwhelming reception has led to speculation that the SEC may have approved Ethereum ETFs prematurely. The regulator has also extended its review of Cboe’s proposal to list options on Ethereum ETFs, pushing the decision deadline from October 19 to December 3.
Australian Market Offers a Glimmer of Hope
While US-based Ethereum ETFs struggle, Australia has seen the launch of its first ETF directly holding Ether. The Monochrome Ethereum ETF (IETH) went live on Cboe Australia on October 15, with assets under management reaching $176,600. This follows the successful launch of Monochrome’s Bitcoin ETF in June, which has amassed almost $10.7 million.
Jeff Yew, CEO of Monochrome Asset Management, expressed confidence in the Australian market’s potential for spot crypto ETFs, citing a “different trajectory” compared to other markets.
ETH/USD Technical Analysis: Price Surge and Potential Rally
Despite the ETF challenges, Ethereum’s price has shown resilience. ETH recently surged above the $2,500 resistance level, climbing over 5% in a fresh rally. The price is currently trading above $2,550 and the 100-hourly Simple Moving Average.
A key bullish trend line is forming with support near $2,520 on the hourly chart. If Ethereum can clear the $2,620 and $2,650 resistance levels, it could continue its upward momentum. The next major resistance lies at $2,720, with potential targets at $2,800 and $2,880 if the rally sustains.
However, failure to break above $2,650 could lead to a decline, with support levels at $2,600 and $2,520. A drop below these levels might push the price towards $2,450 or even $2,400 in the near term.
Proposed Network Upgrades: Lowering the Validator Threshold
In a significant development, Ethereum co-founder Vitalik Buterin has proposed reducing the validator threshold from 32 ETH to 1 ETH. This change aims to democratize staking and enhance Ethereum’s decentralization by allowing more individuals to participate in network validation.
The proposal also includes a “single-slot finality” feature to speed up block confirmations, potentially reducing finalization times from 15 minutes to around 12 seconds. If implemented, these upgrades could usher in a new era of accessibility and efficiency for Ethereum.
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