CryptoQuant warns of Ethereum price correction and volatility if ETF approval falters.

On-chain analytics firm CryptoQuant warned that ETH prices could fluctuate if uncertainty arises in the pending spot Ethereum ETF.

It warned that ETH could suffer a “significant price correction” if the SEC rejects the ETH ETF application or delays the approval process.

Additionally, high exchange flows may lead to ETH price volatility in the future. Exchange flows reached 62,000 ETH, the highest since March, amid rumors of a pending approval of a spot ETH ETF.

upward pressure on prices

Despite the possibility of a contraction, the price of ETH has risen for several days following rumors that the SEC will approve a spot ETF linked to the digital asset.

As of press time on May 22, Ethereum was trading at $3,735, up about 21% in 24 hours, based on CryptoSlate data.

CryptoQuant said ETH open interest increased from 2.8 million ETH to 3.2 million ETH as traders actively opened long positions in the futures market in anticipation of higher prices, putting upward pressure on prices. This is the highest since January 2023.

This activity resulted in a short squeeze and a cascade of short liquidations.

Permanent ETH holders, or accounts that hold ETH but do not sell, have purchased large amounts of ETH, creating additional upward pressure on the price. Permanent holders purchased more than 100,000 ETH in one day, the highest daily amount since September 2023.

Buy orders are dominating the ETH perpetual futures market with taker buy/sell ratios above 1, putting further pressure on the market.

Liquidation of ETH short positions reached 9,300 ETH, the highest hourly volume in 2024 and creating selling pressure in the market going forward.

Waiting for application

The SEC is due to decide on VanEck’s spot ETH ETF proposal on May 23, but could decide on a similar application at the same time.

The approval process is still in progress. On May 21, Cboe filed Rule 19b-4 changes on behalf of five ETH ETF issuers. Nasdaq also amended its 19b-4 filing for BlackRock, and NYSE Arca filed updates for Grayscale’s Ethereum Mini Trust and Bitwise’s applications.

FOX Business Reporter Eleanor Terrett said The SEC and issuers are now beginning to dialogue around the S-1 registration statement. Bloomberg ETF analyst James Seyffart believes the fund may not launch for weeks or months after initial approval.

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