Ether recently encountered significant resistance at the $4,100 level on March 12, leading to a 9% drop in its price over the past week, a sharper decline than the broader cryptocurrency market, which saw a 2.5% decrease in total market capitalization.
This downturn has prompted speculation about the durability of Ether’s current $3,200 support level.
A key potential driver for Ether is the possibility of the U.S. Securities and Exchange Commission (SEC) approving a spot Ethereum exchange-traded fund (ETF), with a decision expected by May 23.
Yet, Bloomberg’s James Seyffart remains skeptical of approval, stating, “However, Bloomberg senior ETF analyst James Seyffart does not consider approval as his base scenario.”
Despite the price setback, the Ethereum network saw significant upgrades with the Dencun hard fork on March 13, aimed at improving scalability and layer-2 data processing.
This update has led to reduced transaction fees on platforms like Arbitrum, Optimism, and Base, bolstering the case for layer-2 solutions among Ethereum users.
Cointelegraph highlights this trend, noting, “Data indicates a surge in 7-day volumes for Arbitrum, Optimism, and Base by 145%, 144%, and 203%, respectively, thereby alleviating some of the downward pressure on Ether’s price that was attributed to high gas fees.”
However, competition from networks like BNB Chain and Solana, which offer lower base-layer transaction fees, remains fierce.
1Despite this, Ethereum continues to see positive ecosystem developments, even as regulatory scrutiny in the U.S. intensifies, with the SEC investigating connections to the Ethereum Foundation to potentially classify Ether as a security.
The recent SEC actions, especially in light of Ethereum’s shift to proof-of-stake, have led to a mixed response from the market and industry figures.
Some, like Van Buren Capital and lawyer Scott Johnsson, view the SEC’s scrutiny as a potential obstacle to Ether ETF approvals, while Coinbase’s chief legal officer, Paul Grewal, contends, “The SEC has no valid reason to reject the Ether ETP applications.”
Market sentiment, as gauged by the ETH options 25% delta skew, reflects a cautious stance, with a recent shift from 0% to 5%, indicating skepticism but not outright bearishness towards the $3,200 support.
Despite this, Ethereum’s position as a leading network, with a total value locked (TVL) of $94 billion and BlackRock’s initiative to launch a tokenized asset fund on Ethereum, underscores its enduring significance.
This backdrop suggests that, despite current challenges, Ether’s foundational support level remains robust.
To submit a crypto press release (PR), send an email to sales@cryptointelligence.co.uk.
