Ethereum price clings to key support amid SEC probe and traders’ shifting sentiment

Ether (ETH) price faced a significant setback after encountering robust resistance at the $4,100 mark on March 12. Ether has seen a 9% decline over the past week, underperforming when compared to the broader cryptocurrency market, leading traders to speculate whether the current support level of $3,200 will hold. For context, the total cryptocurrency market capitalization fell by 2.5% during the same timeframe.

Ether/USD, 12-hour price index. Source: TradingView

Ether’s bullish prospects hinge on spot Ether ETF approval

From a bullish viewpoint, the potential approval of a spot Ethereum exchange-traded fund (ETF) remains a key catalyst. The United States Securities and Exchange Commission (SEC) is currently reviewing the matter, with a final decision anticipated by May 23. However, Bloomberg senior ETF analyst James Seyffart does not consider approval as his base scenario.

The recent upgrades to the Ethereum protocol should not be overlooked. The Dencun hard fork, which took place on March 13, aimed at enhancing the network’s scalability and improving layer-2 data processing capabilities, is highly sought after by rollup solutions. As a result, transaction fees for most applications on Arbitrum, Optimism, and Base have significantly decreased.

Cointelegraph notes that, in theory, Dencun’s enhancements are expected to encourage Ethereum users to embrace layer-2 solutions. Data indicates a surge in 7-day volumes for Arbitrum, Optimism, and Base by 145%, 144%, and 203%, respectively, thereby alleviating some of the downward pressure on Ether’s price that was attributed to high gas fees.

It’s worth noting that competitors like BNB Chain (BNB) and Solana (SOL) provide significantly lower transaction fees at the base layer, which often appears more accessible to newcomers. Despite the positive impact on Ethereum’s ecosystem, Solana’s decentralized application (DApps) volumes have increased by 57% over the last week, according to DappRadar.

Regulatory challenges could adversely affect Ether’s price

The bearish outlook for Ether’s mid-term price is bolstered by the increasingly complex regulatory environment in…

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