Ether ignores ETF hype

May 24, 2024

Reading time: 5 minutes

Ether's price remains steady despite SEC approval of spot Ether ETFs

Key points:

  • Approval of spot Ether ETFs by the SEC fails to prompt significant price movement in Ether.

  • Analysts say the market may have already priced in the approval.

News - The long-awaited approval of spot Ether ETFs by the U.S. SEC failed to deliver an immediate price surge for the world's second-largest cryptocurrency. Ether did experience some volatility around the news, but the price appreciation didn’t meet market expectations.

What was the reason behind this?

  • Analysts offer two main explanations for this muted response. Firstly, many believe the market had already priced in the ETF approval. Ether's price had climbed 29% in the preceding week as rumors of a positive SEC decision swirled.

  • Secondly, the ETFs themselves aren't ready for launch just yet. They require further regulatory hurdles to be cleared, including the filing and approval of a detailed S-1 document. This process could take weeks or even months.

Crypto commentator Zach Rynes argues that the real price movement will come when investors start funneling money into these ETFs. Some analysts, like those at Second Mountain research firm, even predict a "massive capital inflow" in the billions during the ETFs' first week.

Any concern? However, history suggests a price surge isn't guaranteed. When spot Bitcoin ETFs debuted in January, Bitcoin's price actually dropped 15% before recovering over the next month.

Another potential concern is the fate of Grayscale's Ethereum Trust (ETHE). Its planned conversion into a spot ETF could trigger outflows, mirroring the situation with Grayscale's Bitcoin Trust (GBTC) after the Bitcoin ETF launch.

Solana's memecoin community booms amid Roaring Kitty's resurgence

Key points:

  • GME memecoin on Solana spiked 460% post-Gill's post, benefiting from low fees.

  • Solana's revenue surpassed 60% of Ethereum on some days.

News - The meme stock frenzy reignited last week with the surprise return of Reddit celebrity "Roaring Kitty" (Keith Gill). A single post, a meme image with no text, sent shockwaves through the meme investment community.

GameStop (GME) and AMC stock prices skyrocketed, experiencing high volatility and trading halts. GME surged over 100% before being paused.

Effects on the blockchain - The impact wasn't just on Wall Street. Solana, a blockchain known for affordability and its active memecoin scene, saw a corresponding surge. The GME memecoin on Solana, with no affiliation to the GameStop company, shot up a staggering 460%.

Despite the resurgence, Solana's overall fee revenue remains lower than its peak in March, the height of memecoin popularity. Still, the network processed significantly more transactions than earlier this year.

Conversely, Ethereum, the leading blockchain, has seen a drop in demand, resulting in historically low fees.

This disparity has led to a new high in the fee ratio between Solana and Ethereum. Solana's revenue surpassed 60% of Ethereum's on some days, a dramatic shift from pre-2024 levels.

BTC trading volume hits 2022 levels in US, APAC market interest lags behind

Key points:

  • Bitcoin price surge sparks renewed optimism and increased trading volume.

  • Lower volume in APAC hours hints at a large untapped market.

News - Bitcoin experienced a recent price surge, fueling renewed optimism in the cryptocurrency. This uptick was accompanied by a significant increase in trading volume, particularly during US trading hours.

The high volume suggests a surge in American investor interest in Bitcoin. Some analysts believe this may indicate market saturation in the US. However, the picture is different in the Asia-Pacific (APAC) region. Trading volume during APAC hours remained considerably lower, suggesting a large untapped market for Bitcoin.

What’s more? Meanwhile, on-chain data revealed the movement of over 10-year-old Bitcoin holdings. This large transaction involving 2,000 BTC sparked concerns about "whale behavior" and its potential to trigger fear, uncertainty, and doubt among traders, leading to a price drop.

However, several factors could influence its future trajectory. Firstly, the increasing velocity of Bitcoin transactions suggests a rise in trading activity. Secondly, a high MVRV ratio indicates that most holders are currently in profit. While this is positive for investors, it also raises the risk of profit-taking, which could push prices down.

Finally, the declining Long/Short ratio suggests a growing number of short-term holders in the market, who are typically more likely to sell their holdings compared to long-term investors.

NOTcoin tumbles after airdrop frenzy: Toncoin feels the chill

Key points:

  • NOT token loses over 50% of its value in the first week after launch.

  • The decline followed a massive $1 billion airdrop to investors.

News - NOT, the token powering the Telegram-based play-to-earn game Notcoin, has lost over half its value since launching on 16 May. At press time, it was trading at $0.0053, after plummeting 55% in just one week.

This steep decline comes after NOT airdropped nearly $1 billion worth of tokens to investors. The initial excitement saw NOT skyrocket to an all-time high of $0.037 shortly after launch. It even reached the eighth spot in daily trading volume on major exchanges like Binance, exceeding $1.4 billion within 24 hours.

Post-airdrop scenario - However, the post-airdrop buzz quickly faded, leading to a dramatic drop in daily trading volume. This decline in NOT's activity has had a ripple effect on the Toncoin (TON) network, which NOT operates on. The surge in activity leading up to the NOT airdrop had boosted TON's value. However, Santiment reveals a 40% drop in daily TON transaction addresses and a 53% decrease in new daily addresses for TON trading since 16 May.

Despite the slump in NOT and the reduced demand for TON, the broader market sentiment remained optimistic. As of this writing, TON was trading above its 20-day Exponential Moving Average (EMA) at $6.49. In the world of cryptocurrency, this is typically seen as a bullish signal, indicating a shift towards coin accumulation by investors.

Crypto Scams Uncovered

  • Without informing any of his 391,000 active traders, Faruk Fatih Ozer stopped operations of Thodex, a Turkey cryptocurrency exchange. It was later discovered that the CEO had scammed his users a whopping $1.37 billion via a marketing campaign. Besides that, users could not access the funds trapped in the exchange, valued between $2 billion and $10 billion.

  • A 2023 independent investigation revealed that a Chinese group used a “pig butchering business” to scam unsuspecting cryptocurrency investors. One of the victims lost his life savings worth $2.7 million. About $90 million also flowed into the scam account between January 2021 and November 2022.

  • Hackers who identified a loophole on the Nomad bridge carted away $186 million from the platform. Though the perpetrators later returned some of the funds, it was less than 5% of what was looted.

Top 3 coins of the day

Uniswap (UNI)

Key points:

  • At press time, UNI was trading at $9.07 with 21.34% hike in the last week.

  • Its trading volume has increased substantially after 15 May.

What you should know - UNI, despite a stagnant performance earlier in the year, witnessed a surge in demand on 21 Feb, propelling its value to $17.05. Subsequently, a correction ensued, leading to a dip to $5.89 by 13 April, this level acted as a strong support for the next two months. Recently, UNI broke out of its tight trading range of $5.903-$8.366, ascending to $9.84 on 20 May. At press time, the RSI sat at 61, rebounding from the overbought territory above 70. This suggests a favorable momentum, possibly indicating further bullish movement. With the recent breakout and RSI rebound, investors might anticipate a potential continuation of the upward trend.

Key points:

  • Chainlink has been registering high demand on the lower timeframe.

  • Its OI-Weighted Funding Rate has declined in the past 24-hours.

What you should know - Chainlink is at a crossroads. Despite a recent uptick of 5.21%, the coin remains on a downward trend since mid-March. At the time of writing, it was priced at $17.28, bulls could push LINK towards its supply zone of $19.48-$20.48 in the near future if buying pressure persists. However, technical indicators suggest a potential struggle. The MACD and signal line are both above neutral, but further confirmation is needed to solidify a bullish trend. If bears control the market, LINK could fall back to its demand zone of $13.57-$12.34.

Cardano (ADA)

Key points:

  • ADA was trading close to its upper Bollinger Band.

  • The coin didn’t react positively to the broader market uptrend. 

What you should know - Cardano has been trading within a confined range for the past few weeks, stuck between $0.4009 and $0.5162. This consolidation period follows a significant drop from ADA's highs near $0.8104 on 14 March. While the coin attempted to break above resistance at $0.5198 on 22 April, it was met with selling pressure and has since settled back near the middle of its range. On the technical front, the RSI sat at 44.87, indicating neutral territory. This suggested a lack of strong conviction, especially from buyers. A breakout above $0.6209 with increasing trading volume could signal a bullish trend, while a drop below $0.4235 could indicate further downside potential.

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