Ether (ETH) surged to $4,000 this year, just a step away from its all-time high of $4,891. However, as the price of Bitcoin slid due to net outflows from ETFs, ETH also plummeted to $3,200, briefly touching $3,000. With a drop of over 20% in just one week, what could be the possible reasons?
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Low probability of Ether spot ETF approval
Issuer’s application for “pledgeable” adds to the difficulty
Mediocre performance of Ether.fi in repledge agreement
Recently, apart from the influence of Bitcoin’s price, there was also a discussion about the possibility of a spot ETF for Ether, which pushed up the price of ETH itself.
However, the approval of the Ether spot ETF has been postponed by the U.S. Securities and Exchange Commission (SEC), and several professional ETF analysts do not hold much hope for its approval in May, weakening the factors driving up the price of ETH once again.
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(ETH reaches $3,700, SEC postpones BlackRock Ethereum ETF)
(SEC’s probability of approving Ethereum spot ETF is decreasing before 5/23)
Some issuers have added the option to pledge ETH in their application documents to obtain Ethereum staking rewards, providing additional benefits for operators and investors.
Although the general community believes that this is a major advantage for Ethereum deflation and product attractiveness, this policy may also make the SEC consider ETH as a security, further increasing the difficulty of approval.
(Wall Street enters Ethereum staking? Fidelity Investments revises ETF application, hoping to open up Ethereum staking)
Ether.fi, a repledge agreement with a lock-up value of up to $2.56 billion, recently issued the token ETHERFI. Although it is the first-ranked repledge agreement, its token price did not perform impressively after its release. This may indicate that other repledge agreements may perform similarly to Ether.fi at most.
In the past, due to the popularity of repledge and repledge agreement, many users invested in Ethereum in exchange for “points” in anticipation of airdrops. However, this expectation may have been shattered.
Only when EigenLayer is officially released will it be possible to determine whether the repledge hype can bring another peak to Ethereum.
(Ether.fi will begin a token airdrop at 8 pm tonight, Sun Yuchen receives 3.45 million ETHFI tokens)
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Further reading
GBTC selling pressure continues, Bitcoin’s downward trend may not turn until late March
Even market support is guilty! The U.S. Securities and Exchange Commission officially sues Ripple and two executives for selling $1.3 billion in unregistered securities and manipulating coin prices.