An on-chain analytics firm has issued a warning about potential price fluctuations in Ethereum (ETH) if spot ETFs tied to the digital asset encounter uncertainties. According to the firm, ETH could see a “significant price correction” if the SEC denies or delays the approval process for ETH ETF applications.
The warning comes amidst high exchange flows, with rumors circulating about pending spot ETH ETF approvals. Exchange flows recently hit 62,000 ETH, the highest level since March, which could contribute to price volatility in the coming days.
Despite the potential for downward adjustments, ETH prices have been on the rise following speculation that the SEC may greenlight spot ETFs linked to the digital asset. As of May 22, Ethereum was trading at $3,735, marking a roughly 21% increase over 24 hours, based on data from CryptoSlate.
Traders have reportedly been driving up ETH prices by opening long positions in the futures market, leading to a surge in ETH open interest. Additionally, permanent ETH holders have been buying large amounts of the cryptocurrency, with more than 100,000 ETH acquired in a single day, the highest daily amount since September 2023.
ETH short position liquidations have also been on the rise, reaching 9,300 ETH and resulting in a short squeeze in future markets, further adding to upward price pressure.
At present, the SEC is set to make a decision on VanEck’s spot ETH ETF proposal on May 23, with similar applications possibly being reviewed simultaneously. The approval process is ongoing, with Cboe, Nasdaq, NYSE Arca, and other entities filing rule changes and updates related to ETH ETFs.
Analysts believe that funds linked to approved ETFs may not launch immediately, potentially taking weeks or even months to materialize. As the discussions continue, the market remains volatile, with ETH prices reacting to various factors both within and outside the crypto industry.
