Ethereum (ETH) ETFs got recent approval by the SEC, which has made a lot of excitement and emotions among the crypto community and I am swept up in this excitement and uncertainty.
Image source
Over the last week, Ethereum price rose by upwards of 20%, nearly hitting $4,000 mark. It was expected that this surge would be driven by anticipations for Ethereum ETF’s being approved by SEC after a long wait. Nevertheless, instead of just going up on its value with absolute certainty, when it became official, it caused a lot of volatility.
In the market of cryptocurrencies, reactions can be erratic. The clearance given to these ETFs should have been an obvious bull sign but within moments ETH entered the red zone. Crypto investing is such an amazing rollercoaster of feelings and markets moving around that sometimes becomes thrilling while at other times nerve-wracking too.
I’ve noticed that a number of people have different ideas as to what the approval means for Ethereum’s future. According to a few analysts who are very optimistic about it, ETH might break a new record high of above $13,000. This ray of hope claims ETF approval is a major stepping stone which would draw in more institutional investors and thus increase its value substantially. I understand this perspective as well as what excites one about it. This is because further acceptance by the mainstream market can lead to increased demand for the asset and in turn raise its prices.
However, there are those that err on the side of caution. They highlight indicators like TD Sequential which suggests short-term exhaustion and chances of correction down ahead. This indicator has been designed by Tom DeMark so as to identify those places where trends can change their direction. Consequently, Ethereum may drop in price within the next few days before it goes uphill again. I also find this careful approach quite rational since crypto market is characterized by volatility and sudden reversals.
Even more interesting is the situation, which comprises all the key metrics and indicators that are currently at play. An instance was shown by an open interest that hit record high. It measures the total number of derivative contracts outstanding but not yet settled. High open interest indicates that large price swings may be imminent as traders position themselves for what they think will be the next significant move. Both thrilling and slightly nerve-wracking for me. This clearly shows that many people have bet on Ethereum making big moves, however it also means that the market can go either way.
Exchange netflow is another important metric to consider. Since two days ago, Ethereum’s exchange netflow has been negative implying an increasing amount of ETH is being withdrawn from exchanges to self-custodying addresses. It is usually a bullish sign as it reduces immediate selling pressure. Instead of trying to offload their ETH quickly, people are holding onto it. To me, this indicates a strong confidence among holders of ETH in terms of expectation for higher prices in future, thus I view it positively.
Besides, the Relative Strength Index (RSI) is hanging around 52. This measures how fast and how much a price changes, and anything above 70 suggests that an asset has been overbought and below 30 implies oversold. Since Ethereum’s RSI is about at 52, it can be said to be neither overbought nor oversold which implies it could go either way. The neutrality of this position further complicates the forecast on the next price action.
Although the endorsement of the ETF by SEC is undeniably an important moment for ethereum and crypto market generally, things aren’t as straightforward as they may seem.
This experience simply reinforces what I already knew about cryptocurrency: it is a dynamic and unpredictable market. Being updated and ready for good times as well as bad ones is essential as an investor. Where Ethereum goes from here and what these developments mean for its future are things I am eagerly looking forward to seeing unfold.
