CryptoQuant warns of Ethereum price correction, volatility if ETF approvals waver

On-chain analytics firm CryptoQuant warned that ETH prices could fluctuate if pending spot Ethereum ETFs encounter uncertainties.

It warned that ETH could undergo a “significant price correction” if the SEC denies ETH ETF applications or delays the approval process.

Furthermore, high exchange flows could produce ETH price volatility in the coming days. Amid rumors of pending spot ETH ETF approvals, exchange flows reached 62,000 ETH, the highest since March.

Upward price pressure

Despite possible reductions, ETH prices have risen over several days following rumors that the SEC will approve spot ETFs connected to the digital asset.

Ethereum was trading at $3,735 as of press time on May 22, up approximately 21% over 24 hours, based on CryptoSlate data.

CryptoQuant said traders produced upward price pressure by aggressively opening long positions in the future market in expectations of higher prices, driving ETH open interest from 2.8 to 3.2 million ETH, the highest since January 2023.

The activity resulted in a short squeeze and cascading short liquidations.

Permanent ETH holders, or accounts that hold but do not sell ETH, additionally produced upward price pressure by purchasing a large amount of ETH. Permanent holders bought more than 100,000 ETH in one day, the highest daily amount since September 2023.

Buy orders dominate the ETH perpetual futures market with a taker buy/sell ratio above one, putting further pressure on the market.

ETH short position liquidations reached 9,300 ETH, marking the highest hourly volume in 2024 and causing a short squeeze in future markets.

Applications pending

The SEC must decide on VanEck’s spot ETH ETF proposal on May 23 but may decide on similar applications simultaneously.

The approval process is still underway. On May 21, Cboe filed 19b-4 rule changes on behalf of five ETH ETF issuers. Nasdaq has also amended 19b-4 filings for BlackRock, while NYSE Arca has filed updates for Grayscale’s Ethereum Mini Trust and Bitwise‘s application.

FOX Business reporter Eleanor Terrett stated that the SEC and issuers are now entering conversations around S-1 registration statements. Bloomberg ETF analyst James Seyffart believes that funds may not launch for weeks or months after initial approvals.

Mentioned in this article