Ethereum (ETH) has been grappling with maintaining its price above the crucial support level of $3,200 following a notable setback, triggered by encountering strong resistance at $4,100 on March 12. Amidst a 9% decline over the past week, Ethereum’s performance lags behind the broader cryptocurrency market, raising concerns among traders about the sustainability of its current support level.
Bullish Sentiments Of Ethereum Tied to ETF Approval Prospects
A potential catalyst for Ethereum’s bullish prospects lies in the awaited approval of a spot Ethereum exchange-traded fund (ETF) by the United States Securities and Exchange Commission (SEC), expected by May 23. However, experts like Bloomberg’s senior ETF analyst James Seyffart view approval as less likely, despite recent upgrades to the Ethereum protocol aimed at enhancing scalability and layer-2 processing capabilities.
Enhancements to Ethereum’s Protocol and Regulatory Hurdles
The recent Dencun hard fork on March 13 sought to improve the network’s scalability, particularly for layer-2 solutions, resulting in decreased transaction fees for applications on platforms like Arbitrum, Optimism, and Base. While these enhancements aim to alleviate downward pressure on Ether’s price attributed to high gas fees, Ethereum faces regulatory challenges in the United States, with the SEC scrutinizing possible connections between companies and the Ethereum Foundation. This regulatory scrutiny could impact Ether’s mid-term price, particularly amid ongoing discussions regarding its classification as a security.
Trader Sentiment and Ethereum’s Future Outlook
Professional traders’ sentiment, as reflected by the ETH options 25% delta skew, shows cautious skepticism towards Ethereum’s $3,200 support level. Despite a recent 11% price correction, the skew metric has remained relatively neutral, indicating limited intensification of bearish sentiment. With Ethereum maintaining its leading position in terms of total value locked (TVL) and initiatives like BlackRock’s tokenized asset fund on Ethereum, there appears to be confidence that Ether’s support at $3,200 will hold in the foreseeable future.
