Ethereum Price Slams Below $3K Amidst Grayscale ETF Withdrawal

• 1 Grayscale’s retraction of its ETH Futures ETF proposal has cast doubt on the likelihood of the SEC giving the green light to spot Ethereum ETFs.
• 2 Ethereum Investors have increased their short positions anticipating a price drop following the withdrawal of Grayscale’s application for Ethereum ETF.

In a recent series of events, Grayscale Investments, the largest crypto asset manager withdrew its bid for Ethereum futures ETF, leading to a surge in short positions by short-term investors who foresee a potential decline in value.

The market stands on precarious ground, with short positions worth $345 Million vulnerable to a potential 3% increase in ETH’s price. At the time of writing, Ethereum was exchanging hands close to the $3,000 mark. Let’s explore what it could mean for Ethereum’s price trajectory in the near future. 

Community Confidence Fades As Grayscale Withdraws ETF Application!

Grayscale’s recent withdrawal of its Ethereum futures ETF proposal on May 7, just a couple of weeks ahead of the SEC’s planned decision date, has sparked debate over Ether’s categorization and the outlook for direct Ether ETFs later in the month.

The uncertainty surrounding the SEC’s stance on approving direct Ethereum ETFs has been heightened by Grayscale’s unexpected withdrawal of its ETH Futures ETF application.

Amidst the early positive expectations this year, the mood within the crypto community has shifted to one of doubt regarding the SEC’s endorsement of a spot Ether ETF by the May 23 deadline. With the regulatory environment in flux, the crypto sector is keeping a vigilant eye on the unfolding events.

Could ETH Plunge Below $3K Amid Grayscale ETF Uncertainty?

Grayscale’s recent withdrawal from its ETF application, ahead of the SEC’s anticipated approval, has sparked worries among community members and investors. Consequently, short-term investors have been bolstering their short positions.

According to data from the financial website app.santiment.net, there’s been a noticeable decrease in the MVRV Long/Short Difference in recent sessions, indicating a rise in short positions.

Moreover, these developments have also affected Ethereum’s market value. Ethereum has been under consistent selling pressure in the last couple of sessions, causing its price to fall from $3200 to the current level of $3000.

Despite efforts, the bulls are finding it challenging to maintain the $3000 level. The current price movement is leaning towards a bearish trend, largely influenced by the news.

From a technical standpoint, the cryptocurrency has been trading within a range, with key Exponential Moving Averages (EMAs) forming the upper and lower boundaries. The 50-day EMA is serving as resistance, while the 200-day EMA provides support.

The critical $3000 support level, if breached, could potentially lead to a decline towards the $2800 mark. Conversely, overcoming the immediate resistance at $3200 could pave the way for a rise towards the $3500 threshold.

Conclusion

Grayscale Investments has pulled its Ethereum futures ETF bid, causing a shift from optimism to skepticism in the crypto community about the SEC’s approval of a spot Ether ETF by May 23. This move has led to increased short positions among investors, as reflected in the MVRV Long/Short Difference. 

Moreover, Ethereum’s price dropped from $3200 to $3000 and was struggling to hold at the $3000 level at the time of writing. Now, If the buyers fail to defend the $3K level, the price may fall to $2800. On the flip side, if the sentiments turn around and ETH price breaks above $3200, it could climb towards $3500.

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only and do not establish financial, investment, or other advice. Investing in or trading crypto or stock comes with a risk of financial loss.

Steve Anderrson

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.