Ethereum Struggles to Break $4,000 Despite SEC's Approval of Spot ETFs

Even though the SEC recently approved two additional spot Ethereum exchange traded funds (ETFs), the Ether futures market remains cautious about the possibility of ETH breaking above $4,000 in the near future. 

Source: www.odatv.com

A notable 12.5% price surge occurred between July 12 and July 15, but the momentum was stifled by strong resistance at the $3,500 mark. Subsequently, ETH corrected down to $3,400 on July 18, demonstrating a lack of sustained bullish sentiment in the derivatives market, even with the positive regulatory developments.

Analysts Predict a $5,000 Price Target for ETH: Is This Projection Realistic?

The SEC has reportedly given preliminary approval to three issuers to start trading spot Ether ETFs starting July 23. Currently, eight spot Ether ETFs await final regulatory approval after amendments to their S1 filings. Investment Officer, Matt Hougan, anticipates ETH reaching $5,000 by the end of 2024, citing its low inflation rate, minimal validator costs, and 28% of supply locked in staking.

Despite the bullish momentum for spot ETH ETFs, investor sentiment towards Ethereum remains tepid. Ethereum's decentralized application (DApp) volumes increased by 7% in the last 30 days to $221 billion, according to DappRadar. In contrast, BNB Chain saw a 25% decline in activity, and Solana experienced a 16% drop. Ethereum continues to lead in terms of DApp deposits, with 17.5 million ETH locked (TVL of $59.8 billion), compared to competitors Solana and BNB Chain, which each hold around $4.8 billion. Ethereum's layer 2 ecosystem also saw growth, with native TVL rising 8.5% over the past 30 days to $14 billion. Onchain data reflects Ethereum's robust performance without signs of weakness.

On the macroeconomic front, the latest US Producer Price Index exceeded market consensus, indicating ongoing inflation pressures and potential Fed actions to curb inflation. China's lower than expected GDP growth of 4.7% poses risks to global stock markets. Additionally, rising initial jobless claims in the US suggest a cooling labor market, potentially prompting the Fed to consider interest rate cuts in the coming months. Even with these economic indicators, there's no evidence of investors exiting risk markets, as the S&P 500 index is hovering just 2% below its all-time high set in July 2021. For ETH to surpass its previous high of $4,868 from November 2021, it would need to appreciate by 43%.

Ether bulls might contend that the current lack of confidence could pave the way for a positive surprise if the anticipated strong net inflows into spot ETFs materialize. However, given that Ether’s price has not surged despite a favorable environment for risk-on assets, the ETH derivatives metrics suggest a lack of investor interest, making a bull run above $4,000 improbable.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.