Home Business News Ethereum continues consolidated despite regulatory concerns

On Friday, Ethereum recorded some gains of about 1% this morning, holding on to the highest level of $3,500, within relatively calm trading on the day and on Thursday, after the violent correction that cryptocurrencies were subjected to.

The correction that cryptocurrencies experienced last week, which was primarily driven by the Bitcoin correction with the acceleration of outflows from GBTC, coincided with the return of regulatory concerns to the fore again, this time with the elimination of the second largest cryptocurrency, Ethereum.

We are seeing ongoing talk in the news about a potential SEC investigation targeting the Ethereum network and the developing company, the Ethereum Foundation. While the features of the movements have not yet become clear, we see some hypothesis that attempt to explain this surprising step now from the regulators.

Among these explanations is the SEC’s move to strengthen its position in the event that it wants to reject applications to launch Ethereum spot ETFs similar to Bitcoin that were approved in January.

Before approving the Bitcoin ETFs, the SEC was criticized for having no basis for denying the launch these ETFs and was involved in a legal struggle with Grayscale over its rejection of its application to convert the Grayscale Bitcoin Trust into a spot ETF, which the SEC ultimately lost.

Another hypothesis trying to explain the SEC’s move is the criticism that the agency is being exposed to for pushing it to widen its supervision on the cryptocurrency market, in which Ethereum plays a very pivotal role.

Therefore, any large-scale regulatory move could have very serious consequences, although this is not possible now. I believe that the SEC is fully aware of the status of Ethereum and may not seek to shock this market suddenly.

While Bitcoin is called digital gold, Ethereum is almost everything else in this crypto world. It is the second largest cryptocurrency by market capitalization with over $420 billion and is very far behind the closest other cryptocurrencies.

Not only that, the Ethereum network is the most widely used network ever in various aspects and is far behind its closest competitors.

This is because it accounts for about $60 billion in total locked value (TVL), the most important measure of reliability, for cryptocurrencies in decentralized applications and smart contracts built on the network, that is, more than half of the total locked value in the entire market across more than two thousand protocols whether on the main network or the layer 2 (L2) networks, according to DeFiLlama.

These figures demonstrate the broad adoption of Ethereum versus any cryptocurrency, and they also may continue to draw the attention of regulators for a long time.

Despite this negative atmosphere, markets appear to remain optimistic. The long to short ratio of Ethereum-related derivatives remains at about 1.1, despite the relatively very large liquidations that the long positions were subjected to this month, according to CoinGlass. Open interest in Ethereum futures remain also near historical highs at approximately $12 billion.

Options markets indicate continued positive sentiment for Ethereum as well. At Deribit, the put to call ratio is 0.5. While the open interest of these options is more than $3 billion. While more than $900 million worth of these positions are for call options betting on the $4,000 levels of Ethereum.

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