The deadline for the U.S. Securities and Exchange Commission (SEC) to make a decision on the Bitcoin (BTC) ETF is approaching, and the market is optimistic about approval. This decision could have significant implications for the crypto market, including Ethereum (ETH), the second-largest cryptocurrency.
Approval of a Bitcoin ETF could set a regulatory precedent that would make it easier for other crypto-based ETFs to be approved. The idea is that the framework established for a Bitcoin ETF could be applied to other cryptocurrencies, including Ethereum.
In December 2023, the SEC postponed its decision on several pending Ethereum ETF applications in the U.S. until May 2024. These include the Hashdex Nasdaq Ethereum ETF, the Grayscale Ethereum Futures ETF, the VanEck spot Ethereum ETF, and the spot Ethereum ETF filed by Cathie Wood’s ARK Invest and 21Shares.
These delays are part of the SEC’s process, which involves gathering public input before deciding whether to list these ETFs. However, they also come as the commission is attempting to classify some proof-of-stake (PoS) cryptocurrencies as securities.
Interestingly, Ethereum has not been classified as a security in any of the SEC’s recent lawsuits against crypto exchanges. The commission has also not disputed Ethereum’s classification through the ETF registration process with the Commodity Futures Trading Commission (CFTC).
This raises the possibility of a spot Ethereum ETF being approved in the U.S. by May 2024, which could potentially boost ETH prices.
In terms of price correlation, if a Bitcoin ETF is approved and does not result in a “sell-the-news” event, Ether’s price is likely to rally due to its consistent correlation with BTC’s price in recent years.
From a technical perspective, ETH’s price is currently approaching the resistance trendline of its rising wedge pattern ahead of the Bitcoin ETF decision. If there is a delay or denial, the price could correct towards the lower trendline of the wedge around $1,865 by February.
On the other hand, if an ETF is approved, Ethereum could invalidate its rising wedge pattern in favor of an ascending triangle reversal pattern. The upside target for this pattern is around $3,870 by March, which would be a 75% increase from current price levels.
It is important to note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research before making any decisions.