The cryptocurrency market has recently experienced a downturn, with Ethereum (ETH) among the cryptocurrencies that have been affected. Let’s delve into the factors contributing to the decline in Ethereum’s price and the recent 11% surge following reports of the SEC’s potential approval of Ether futures ETFs.
Top Reasons Behind the Crypto Market Downturn
The cryptocurrency market, including Ethereum, has been on a downward trajectory for several reasons according to crypto analysts:
- Rising U.S. Bond Yields: The benchmark U.S. 10-year Treasury note yield surged to 4.31% on Aug. 17, the highest in almost two years. This indicates a shift in investor focus towards safer assets, impacting cryptocurrencies like Ethereum.
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- Hawkish FOMC Stance: The minutes from the FOMC’s July meeting revealed concerns over persistent inflation among most Fed officials. This has raised expectations of an interest rate hike in September, which has historically been bearish for the crypto market.
- Strong U.S. Dollar: The strengthening of the U.S. dollar index since mid-July has coincided with a decline in the market’s total capitalization to a two-month low of $1.097 trillion on Aug. 17. This has negatively impacted cryptocurrencies, including Ethereum.
Why Ethereum’s Price is Down
Ethereum, as a dominant player in the market, has experienced a 1.6% decrease, affected by the factors mentioned above. In addition to these, Ethereum is closely tied to the overall health of the cryptocurrency market and any negative sentiment or decline in the market is likely to affect its price.
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The 11% Surge in Ethereum’s Price
In contrast to the downturn, Ethereum‘s price surged by around 11% to $1,700 following news that the United States Securities and Exchange Commission is set to allow the first exchange-traded funds (ETFs) based on Ether Futures.
The surge followed a Bloomberg report on Aug. 17, which cited anonymous sources familiar with the matter. The report revealed that the SEC appears unlikely to block the applications of nearly twelve companies, including ProShares, Volatility Shares, Bitwise, and Roundhill, that have filed to launch Ether futures ETFs in recent weeks.
Although it remains uncertain which ETF applications will be approved by the SEC, officials have indicated that several of the filings could be approved as early as October.
ETF analyst Eric Balchunas stated that he wasn’t surprised by the SEC’s move to approve Ether futures ETFs. He added that this decision showcases how the regulator’s views on different products can evolve over time.
Implications of the Recent Developments
The approval of Ether futures ETFs by the SEC would mark a significant milestone for the cryptocurrency market. It reflects the regulator’s evolving perspective on digital assets and may indicate greater acceptance of cryptocurrencies by traditional institutions.
ETFs are investment vehicles that provide investors exposure to an asset without owning it directly. They are traded on stock exchanges and can be bought and sold like regular stocks. The approval of Ether futures ETFs would provide investors with a new way to access the cryptocurrency market, potentially attracting more institutional capital.
Conclusion
While Ethereum and the broader crypto market have been affected by various factors, the recent 11% surge in Ethereum’s price following the SEC’s potential approval of Ether futures ETFs is a promising development. It underscores the growing acceptance of digital assets by traditional institutions and regulators. However, the crypto market’s inherent unpredictability means you should exercise caution and seek professional financial advice before making decisions.
Important Notice
Cryptocurrencies are inherently risky. Moreover, all cryptocurrencies are subject to very high volatility and uncertainty. This article does not constitute financial advice. Never spend more than you can afford to lose, and always consult professional unbiased advisors and conduct in-depth independent research before making any decisions. Prior to purchasing ApeMax, please check the official ApeMax website to ensure that you are eligible as purchasing ApeMax is not eligible for buyers from the US, Canada, sanctioned countries, and other ineligible countries.