The lack of response in Ether’s price to positive news may stem from investors’ concerns over deteriorating macroeconomic conditions. Ether (ETH), currently priced at $3,537, has faced downward pressure since June 7 when it fell below the critical $3,800 support level. Despite several favorable developments, its price has hovered below $3,600 as of June
19, showing no weekly change.
Analysts point to several factors contributing to this bearish sentiment. Some attribute it to insufficient institutional demand for cryptocurrencies, while others highlight regulatory uncertainties within the Ethereum ecosystem as significant factors influencing market dynamics.
Noelle Acheson, author of the ‘Crypto is Macro Now’ newsletter, expressed surprise at Ether’s failure to gain positive momentum following Consensys’s legal victory over the regulator. She also questions whether other regulatory issues related to staking could be dampening investor interest.
On June 18, Consensys, a developer within the Ethereum ecosystem, announced that the U.S. Securities and Exchange Commission (SEC) had concluded its investigation into whether Ethereum might be considered a security and the company’s involvement in ETH sales. Consensys had taken legal action against the SEC in April after receiving a Wells notice, which warned that its MetaMask wallet might have violated securities laws.
Ether’s decline coincided with Bitcoin (BTC), the leading cryptocurrency, facing resistance near $72,000 on June 7. This occurred amid investor concerns about the fiscal health of the United States, worsened by high interest rates and negative economic indicators such as rising wages and an increasing unemployment rate. In May, U.S. average hourly earnings rose by 0.4% compared to the previous month, while the unemployment rate climbed from 3.9% in April to 4.0%.
Dan McArdle, the co-founder of Case4Bitcoin, noted that as long as the macroeconomic environment remains stable, cryptocurrency appears reasonably priced, and its long-term bullish trend should continue. However, McArdle warns that a “macro shock” or a sharp correction in the S&P 500 would negatively impact cryptocurrencies in the short to medium term. Therefore, the current lack of interest in Ether could reflect investors’ heightened concerns about a potential recession.
In addition to the recent Consensys development, regulatory news for Ether has been overwhelmingly positive. SEC Chair Gary Gensler confirmed that the launch of U.S. spot Ethereum exchange-traded funds (ETFs) would occur within three months. However, Ethereum faces its own challenges, including persistently high network processing fees, which have exceeded $4 over the past week.
The SEC has concluded its investigation into whether Ethereum (ETH) could be classified as a security, marking a significant development for the cryptocurrency. In a June 19 announcement, Ethereum developer Consensys revealed that the SEC’s Enforcement Division notified them of closing the investigation into Ethereum 2.0. This decision means the SEC will not pursue charges alleging that ETH sales constitute securities transactions, a move hailed as a major victory for Ethereum developers, technology providers, and industry participants.
Consensys initiated the request to end the investigation on June 7, following the SEC’s approval of spot Ether exchange-traded funds (ETFs) in May, which categorized ETH as a commodity. The SEC’s response letter, shared by Consensys senior counsel Laura Brookover, confirms the agency’s decision not to recommend enforcement action.
This regulatory clarity coincides with the approval of 19b-4 filings from major Wall Street firms like VanEck, BlackRock, and Fidelity, paving the way for spot Ether ETFs to be listed and traded. Bloomberg analyst Eric Balchunas anticipates these ETFs will commence trading on July 2. Moreover, K33 Research forecasts substantial investor interest, predicting $4 billion in inflows into these investment products within the first five months. This optimistic forecast suggests a bullish outlook for ETH, with expectations potentially driving its price to $5,500 by August.
In addition to regulatory developments, investor behavior has shown a positive shift with ETH holders moving their tokens into private wallets rather than keeping them on crypto exchanges. This trend indicates a preference for long-term holding strategies over short-term trading or liquidation into other cryptocurrencies or fiat currencies.
