Ethereum bears attempt to take lead following increased odds for a spot ETH ETF denial
|- Ethereum co-founder Vitalik Buterin proposed a new type of gas fee for calldata in the latest EIP-7706.
- Calldata gas would help reduce fees for certain types of transactions and improve the user experience.
- The odds for the SEC to deny spot ETH ETFs have increased, says Bloomberg analyst James Seyffart.
Ethereum (ETH) is indicating signs of a bearish move on Tuesday as it is largely trading horizontally. Its co-founder Vitalik Buterin has also proposed a new type of gas fee structure, while the chances of the Securities & Exchange Commission (SEC) approving a spot ETH ETF decrease with every passing day.
Read more: Ethereum trades horizontally as institutional whales dump heavily on Coinbase
Daily digest market movers: Calldata gas in EIP-7706, spot ETH ETFs see diminished odds
Ethereum could be poised for new upgrades following recent proposals. Here are market movers for the largest altcoin:
- Ethereum co-founder Vitalik Buterin proposed a new type of gas fee structure in a new Ethereum Improvement Proposal, EIP-7706, on Tuesday.
The proposal aims to reduce gas fees for data-heavy transactions that don't require much resources for computation through the introduction of a new type of gas uniquely assigned to calldata. The current gas structure of Ethereum involves only two types of gas, namely execution gas, which covers fees for the computational resources to process transactions, and storage gas, which covers the cost of storing data specifically in "blobs.
EIP-7706 introduces the third category related to calldata - a key part of Ethereum transaction that's transmitted to a smart contract "when functions are invoked." Buterin also recommended in the proposal that Ethereum switch from using separate mechanisms and leverage a common approach for the different gas fees. EIP-7706 could lower gas fees for certain transactions while improving the user experience if the Ethereum community approves it.
The proposal follows an earlier essay on multidimensional gas pricing and the EIP-7702 proposal on account abstraction co-authored by Vitalik Buterin.
Also read: Ethereum declines briefly, JP Morgan sees a spot ETH ETF approval despite recent Wells notice
- As the May 23 deadline for the SEC to decide on Van Ecks' spot ETH ETF application approaches, General Partner at Van Buren Capital, Scott Johnsson, revealed findings in an X post indicating the agency is "considering the security question for ETH."
In response to the findings, Bloomberg analyst James Seyffart concluded that the odds for the SEC to deny a spot ETH ETF have increased. However, he stated that the SEC may not likely claim Ethereum to be a security as a reason for potentially denying spot ETH ETF applications. Meanwhile, Chairman at CoinRoutes David Weisberger suggested the SEC is "trying to ascertain how much political damage such a move will do."
I'm aware this is widely considered a possibility, but this is your official notice that the SEC is considering the security question for ETH in this upcoming spot ETF order. Note that this question was never (afaict) asked regarding a spot/futures BTC ETF product. pic.twitter.com/TwhqmTnJfC
— Scott Johnsson (@SGJohnsson) May 14, 2024I'm aware this is widely considered a possibility, but this is your official notice that the SEC is considering the security question for ETH in this upcoming spot ETF order. Note that this question was never (afaict) asked regarding a spot/futures BTC ETF product. pic.twitter.com/TwhqmTnJfC
— Scott Johnsson (@SGJohnsson) May 14, 2024
Bloomberg analyst Eric Balchunas maintained the same stance of approval being slim in an X post.TLDR: the SEC asked commenters re the Eth spot ETFs whether these filers have properly filed their ETF listing proposals as commodities. This shows the SEC is perhaps considering to Eth is a security in their denial. Our odds of approval remain the same: slim to none. Nice job of… https://t.co/g9HGPzGyOp
— Eric Balchunas (@EricBalchunas) May 14, 2024TLDR: the SEC asked commenters re the Eth spot ETFs whether these filers have properly filed their ETF listing proposals as commodities. This shows the SEC is perhaps considering to Eth is a security in their denial. Our odds of approval remain the same: slim to none. Nice job of… https://t.co/g9HGPzGyOp
— Eric Balchunas (@EricBalchunas) May 14, 2024
ETH technical analysis: Ethereum primed to stay above key support despite bearish sentiment
Ethereum is trading around the $2,900 price level on Tuesday after failing to balance a previous price inefficiency from Friday. In the short term, most traders are slightly bearish as long liquidations hit $24.22 million in the past 24 hours, according to data from Coinglass. ETH's open interest declined by 1.8%, confirming the short-term bearish sentiment. This may be because of heightened expectations of a spot ETH ETF denial by the SEC.
Read more: Ethereum needs a bullish trigger, Joseph Lubin blasts the SEC
However, ETH may quickly bounce back up or at least sustain a sideways movement as the $2,852 price level has proven to be a key support for ETH — it has only gone below it once in nearly three months. The next leg up may see ETH attempt to break past the $3,161 resistance.
ETH/USDT 4-hour chart
ETH may not see huge price gains in the coming days, considering investors are exercising caution as the SEC's decision on ETH ETFs looms.
Additionally, the current price level could also prove a good buy opportunity for long-term holders in anticipation of ETH's next price rally.
Crypto ETF FAQs
An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.
Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.
Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.