Ethereum price went parabolic in the overnight session amid renewed hopes that the Securities and Exchange Commission (SEC) will approve the spot ETH ETF soon. The token surged to over $3,700, triggering more gains in the crypto industry. Bitcoin (BTC) surged to over $72,000 while tokens like Floki, Pepe, Wormhole, and THORChain continued soaring.
Ethereum ETF approval
Some analysts believe that the SEC will approve spot Ethereum ETFs later this year, a move that will lead to more demand for the token. The recent Bitcoin ETF approval has already worked out well, with total assets held by these funds reaching over $50 billion.
Ethereum ETF approval will be notable because of the network’s supply. As shown below, Ethereum balances in exchanges have dropped to a low of 13.6 million, down from a high of over 30 million in 2021.
Ethereum balances on exchanges (CryptoQuant)
This trend has happened mostly because of staking, where investors allocate their coins to secure the network. Data by StakingRewards shows that the staking market cap stands at over $118 billion, a substantial figure since Ethereum has a market cap of over $441 billion.
Therefore, the approval of a spot Ethereum ETF will likely lead to more demand at a time when Ethereum’s supply is fading, which is a positive thing. Some of the companies that have applied for an Ethereum ETF are VanEck, Blackrock, and Ark Invest.
However, as I have written before, there are chances that the SEC will not approve the ETF because ETH is fundamentally different from Bitcoin. Ethereum is a proof-of-stake (PoS) network while Bitcoin is a proof-of-work (PoW) network.
As a PoS network, it means that users can easily stake the token and generate returns, a process that the SEC questions. It believes that the token should be regulated to ensure fairness and safety for the holders.
Ethereum price formed a bullish pattern
The current Ethereum price surge happened after the token formed a highly bullish chart pattern. On the daily chart, we see that ETH dropped from the year-to-date high of $4,090 to a low of $2,838 earlier this month. It formed a triple-bottom pattern at its lowest point this month.
At the same time, it formed a falling wedge chart pattern that is shown in green. In most cases, this is one of the most bullish chart patterns in the market. Typically, a bullish breakout usually happens when the pattern nears its confluence level.
ETH has also remained consistently above the 200-day moving average, signaling that bulls are still optimistic about the token. Therefore, the outlook for Ethereum price is extremely bullish, with the next level to watch being at $4,090, its highest point this year.
