- Consensys’ latest court filings revealed the SEC began investigating Ethereum’s security status in March 2023.
- Hong Kong’s spot Ethereum and Bitcoin ETFs will debut on Tuesday.
- Whales and institutional investors are dumping Ethereum, considering increased outflows following the recent dip.
Ethereum (ETH) began the week by posting losses of 4.2% on Monday after recent filings from Consensys revealed that the Securities & Exchange Commission (SEC) began formal investigations into ETH’s security status since March 2023.
Daily digest market movers: ETH outflows, SEC’s Ethereum security classification, Hong Kong ETFs
Ethereum has slipped back to key range on Monday following recent happenings in the crypto market. Here are your key ETH market movers:
- After receiving a fourth subpoena in March, Consensys sued the SEC last week for unlawfully trying to classify Ethereum as a security. The move sparked a heated debate in the crypto community on ETH’s security status.
A recent filing on Monday revealed the SEC began a formal investigation into “Ethereum’s status as a security” on March 28, 2023, according to Fox Business. The SEC believed “possible offers and sales of certain securities, including, but not limited to ETH,” had transpired since 2018. This includes launching investigations and serving subpoenas to people and organizations that have facilitated the trading of Ethereum.
“Sources with direct knowledge of the matter tell FOX Business that subpoena recipients were instructed by the SEC to sign confidentiality agreements in order to receive information about the progress of the probes,” said Fox Business. The recent filings also revealed, “the SEC may believe sales of Ethereum pre-merger, as early as 2018, are securities.”
- Bloomberg analyst Eric Balchunas has pointed out that this would reduce the chances of a spot Ethereum ETF in May.
I said this on a recent town hall Spaces (as one of the main reasons eth etf ain’t happening) and some guy sharply refuted it. Forget who. I think he was a lawyer. Anyway this is for you Holmes: https://t.co/vtxRCbytpq
— Eric Balchunas (@EricBalchunas) April 29, 2024
Also read: Ethereum fees drops to lowest level since October, ETH sustains above $3,200
- While the SEC seems to be increasing efforts to classify Ethereum as a security, Hong Kong’s spot ETH ETFs will go live tomorrow as regulators in the region have long stated that Ethereum isn’t a security.
An issuer told WuBlockchain that the combined issuance scale of Hong Kong’s spot ETH and BTC ETFs could reach $200 million to $300 million, far higher than the $125 million first-day issuance scale of spot Bitcoin ETFs in the US. The issuer expects the final market size to reach $2-3 billion. However, many US analysts predicted its maximum market size will be at most $500 million.
- On the institutional front, investors continued reducing their exposure to Ethereum, which experienced outflows worth $38.4 million in the past seven days, according to data from CoinShares. This marks the third consecutive week that Ethereum has experienced outflows. Since the beginning of April, total ETH outflows have reached $123.8 million.
- Following a recent drop in ETH’s price, six whales, including FTX/Alameda, dumped 44,000 ETH worth roughly $140 million, according to Lookonchain.
ETH technical analysis: Ethereum may trade sideways without key price trigger
After trading inside the $2,852 and $3,300 range for 15 days, ETH briefly broke the upper level on Sunday. However, it quickly erased its weekend gains a few hours later, beginning the new week at around $3,170. This shows that the range is becoming important for ETH.
Like the general crypto market, Ethereum appears to need a trigger that can push its price heavily. ETH may sustain a sideways movement in the coming days and then rise slightly to fill the liquidity void of Sunday.
ETH/USDT 4-hour chart
ETH may also experience brief volatility as the SEC’s spot ETH ETF decision on May 23 approaches. Long actions may slow down, except if ETH dips to around $2,900 to $3,000.
In the long run, if Bitcoin fails to see a major move, ETH will likely continue consolidating. Ethereum is trading at $3,181 at the time of writing.
Ethereum development FAQs
After the Merge, the Ethereum community is looking at the Sharding upgrade next, which has been slated for sometime later in the year. The development can be summarized in four words, “scalability through more efficient data storage.” The software update will increase the capacity of the blockchain, widening the amount of data that can be stored or accessed. At the same time, all services running atop the Ethereum blockchain will enjoy significantly reduced transaction fees.
A fork is the splitting of a blockchain after developers agree and proceed to implement upgrades. The decision comes after these developers reach a consensus for a software upgrade. The ensuing part will see one part continue with the status as is, while the other one will proceed with new features combined with the former ones. A hard fork basically entails permanent divergence of a new side chain from the original one, while a soft fork is doing the same, only difference being that it is temporary.
EIP-4844 is an improvement proposal for the Ethereum network. The upgrade promises reduced gas fees, which is a valuable offering considering the high transaction cost that continues to daunt crypto players. It has been a long-standing concern for the Ethereum network. The proposal is also referred to as “proto-Danksharding,” with an unmatched ability to increase the speed of transactions on the Ethereum blockchain. At the same time, it helps to reduce the transaction cost as everything becomes decentralized.
Gas token is a new, innovative Ethereum contract where users can tokenize gas on the Ethereum network. This means they can store gas when it is cheap and start to deploy the gas once the market has shifted to the north. The use of Gas token helps to subsidize high gas prices on transactions, meaning investors can do everything from arbitraging decentralized exchanges to buying into initial coin offerings (ICOs) early.
