Crypto Market Anticipates Short-Term Downward Volatility In ETH Ahead Of SEC Decision On Spot Ethereum ETFs, Says QCP Capital
In Brief
QCP Capital suggests price swings that might occur before the SEC reaches a decision on the initial set of spot Ethereum ETF applications.
Singapore-based cryptocurrency trading firm QCP Capital has recently shared its latest analysis, noting that the volatility of ETH contracts has surged to 105. This suggests significant price swings might occur before the United States Securities and Exchange Commission (SEC) reaches a decision on the initial set of spot Ethereum exchange-traded fund (ETF) applications. The deadlines are approaching quickly, with VanEck’s decision set for May 23rd and Ark Invest/21Shares’ scheduled for May 24th.
Furthermore, the funding rate for ETH perpetual contracts dropped dramatically from 50% to flat within just 12 hours. Despite this, the June forward contract continues to offer a 15% return, indicating a decline in short-term speculation but a sustained bullish outlook for the medium term. Additionally, ETH’s risk reversal rate for May 23rd and 31st is at -7, signaling that the market remains apprehensive about short-term downside volatility. This apprehension might prompt traders to engage in tactical hedging of their long ETH positions.
As of the writing time, ETH is trading at $3,736, reflecting a 1% decrease over the past 24 hours. However, it has seen a significant rise of over 26% in the past week. According to CoinMarketCap, the trading volume for ETH over the last 24 hours was $27.298 billion.
Optimism Grows For Spot Ethereum ETF Approval As SEC Signals Potential Shift In Stance
Anticipation for the approval of spot Ethereum ETF is steadily growing, especially amid signs of a potential shift in the SEC’s stance. Recently, Ark Invest removed the staking component from its spot Ethereum ETF application. Following this, Fidelity made a similar amendment to its S-1 registration statement on Tuesday, and Grayscale did the same in its amended preliminary proxy statement, eliminating all references to staking and staking rewards. Previously, these asset managers had proposed allowing investors to stake a portion of their ether via the funds. This updated language likely reflects the SEC’s concerns about the risks associated with staking cryptocurrencies.
Furthermore, Bloomberg ETF analysts Eric Balchunas and James Seyffart significantly increased their probability estimate for the approval of spot Ethereum ETFs from 25% to 75% earlier this week. This change comes after a prolonged period of pessimism, reflecting a newfound optimism in the likelihood of these approvals.
Previously, QCP Capital suggested that ETH prices might surpass those of BTC if the spot Ethereum ETF applications are approved. Additionally, the current market apathy indicates that an unexpected approval of these investment products could surprise investors, potentially triggering a short squeeze and allowing the market to swiftly rebound to recent highs.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
