(24 May 2024, 15:14 PM IST):
The recent approval of Ethereum exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) on May 23, 2024, has certainly made waves in the world of cryptocurrency. This green light from the regulatory authority marks a significant step forward in the mainstream adoption of digital assets, particularly Ethereum, one of the leading cryptocurrencies.
However, despite the anticipation and excitement surrounding this approval, many were surprised to see that the price of Ethereum did not experience the anticipated surge. In fact, rather than climbing to new heights, the price of Ethereum took a dip from its recent high of $3,921 to its current value of $3,661.
So, why didn’t we see the expected price pump?
The answer lies in a phenomenon well-known in the trading world: “Buy the Rumor and Sell the News.” Essentially, this means that traders and investors often act on speculation leading up to a significant event, such as the approval of ETFs, and then sell off once the news becomes official. In the case of Ethereum, as rumors of the ETF approval circulated earlier this month, many investors began buying up Ethereum in anticipation of a price increase.
This buying frenzy drove the price up significantly, from $2,880 to $3,950 in just 24 days. However, once the news of the SEC approval was confirmed, some investors chose to take profits, leading to a drop in price.
It’s worth noting that a similar pattern was observed with the approval of Bitcoin spot ETFs, where the price of Bitcoin also experienced a decline after the news broke.
Looking ahead, what can we expect?
Despite the recent sell-off and profit-taking, many analysts and experts remain bullish on Ethereum’s future prospects. Following the trajectory of Bitcoin, which saw a substantial increase in price following its spot ETF approval, Ethereum could experience a similar surge in the days to come. Bitcoin’s price soared from $41,000 to a high of $71,000 post-approval, indicating the potential for significant gains in the cryptocurrency market as a whole.
In conclusion, while the immediate reaction to the approval of Ethereum ETFs may not have met expectations, the long-term outlook for Ethereum remains promising.