Ethereum, the second-largest cryptocurrency by market capitalization, is currently at a pivotal juncture where a potential breakout is predicted.
Prominent cryptocurrency analyst Jelle recently noted that Ethereum is nearing the end of a falling wedge formation, which is often interpreted in technical analysis as a bullish signal.
Technical indicators and market sentiment
Jelle observed a descending wedge pattern on Ethereum’s chart that is emerging as ETH recently reclaimed its 100-day exponential moving average (EMA), further strengthening the bullish scenario.
According to Jelle, if Ethereum manages to maintain this momentum and break above the upper boundary of the wedge, it could target $4,000, which is a significant “psychological and technical” threshold.
$ETH is close to breaking out of this falling wedge!
Once the 100-day EMA is regained, it only takes a petite push to break the months-long continuation pattern.
Goal: >$4,000.
— Jelle (@CryptoJelleNL) May 20, 2024
The anticipation of this breakout is intensified by the current market dynamics, where at the time of writing Ethereum is trading at just above $3,000, specifically at $3,088.
The asset has seen a moderate raise of 0.2% over the past 24 hours and a total raise of 4.1% over the past week. However, looking at the price chart, Ethereum appears to have consolidated just above the $3,000 level, suggesting a base is being built for future significant moves.
This period of consolidation, often called accumulation, may be largely due to market participants waiting for the U.S. Securities and Exchange Commission’s (SEC) upcoming decision to approve the long-awaited Ethereum spot ETF.
With this critical announcement expected later this week, buyers and sellers appear to be holding out, cautiously awaiting news that will likely determine their next strategic moves.
Regulatory decisions and market speculation regarding Ethereum
So far, Bloomberg senior ETF analyst Eric Balchunas has expressed a cautious stance on the Ethereum spot ETF estimating only a 25% chance that the spot ETF will receive approval.
On the other hand, Nate Geraci, president of ETF Shop, revealed that the ETF approval process involves several key steps, including approval of both 19b-4 filings (changes to exchange rules) and S-1 registration statements (pre-registration forms for novel securities). .
While there is optimism that 19b-4 filings may be approved, there is less certainty regarding the S-1. The SEC’s ponderous involvement in these filings may indicate an extended review period, which could delay the launch of spot Ethereum ETFs.
Deadline for SEC decision this week on cash ETFs…
For ETFs to launch, the SEC must approve both the 19b-4 (exchange rule changes) and the S-1 (registration statements).
Technically, it’s possible the SEC will approve 19b-4 followed by a ponderous play S-1 (especially given the lack of commitment reported here).
— Nate Geraci (@NateGeraci) May 19, 2024
Featured image from Unsplash, chart from TradingView
