Today’s market sees a downturn in the value of Ethereum‘s Ether token, largely influenced by negative developments within the cryptocurrency sphere.
As of May 7, the price of Ether fell to $3,022, marking a decline of around 6.20% from its previous day’s peak.
This downward trend is not isolated to Ether; Bitcoin also experienced a similar fall of approximately 4% during the same period.
A significant factor contributing to this decline is the uncertainty surrounding the U.S. Securities and Exchange Commission’s (SEC) handling of a proposed Ether exchange-traded fund (ETF).
The SEC has postponed its decision regarding the ETF application by Invesco and Galaxy Digital to July 2024.
The delay is due to the SEC’s need for more public comments and to consider further regulatory aspects before allowing trading on the Cboe BZX Exchange.
This comes at a time when the SEC is scrutinizing Ethereum more closely, especially after its shift from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.
SEC Chairman Gary Gensler hinted that staking mechanisms in cryptocurrencies could meet the criteria set by the Howey test to classify as securities.
The postponement dampens potential price boosts that might have resulted from increased institutional investment through the ETF.
Another blow to the cryptocurrency market came with the SEC issuing a Wells notice to Robinhood on May 6, regarding potential securities violations in its cryptocurrency operations.
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This notice could signal upcoming enforcement actions, fostering a climate of regulatory uncertainty that may affect Ether and other digital currencies adversely.
Ether’s current price movement also aligns with a technical correction phase, entering what is known as the “sell-off zone.”
This area includes both a descending trendline resistance and Ether’s 50-day exponential moving average, which have historically capped its price rises.
Despite these challenges, technical analysis suggests that Ether’s market outlook could still be bullish.
It’s recognized within a falling wedge pattern—a setup that often precedes upward price movements once the upper trendline is breached.
If Ether breaks above this boundary, it might ascend to between $3,640 and $4,115 during May.
However, if the price breaks below the pattern’s lower trendline, it could invalidate the bullish scenario, potentially dropping to around $2,780, aligning with its 200-day exponential moving average and the 0.5% Fibonacci retracement line.
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