Ethereum’s lackluster performance has little to do with spot ETH ETF approval

The Ethereum spot exchange-traded fund (ETF) was approved by the U.S. Securities and Exchange Commission (SEC) on May 23. Despite this long-awaited decision, the price of Ether (ETH) failed to hold above $3,800 on May 24, which was surprising given that ETH was trading at $3,943 just two days earlier. The market had been uncertain about the approval odds, so the decision, particularly its timing, caught many off guard.

Ethereum is still 24% below its all-time high

Some market participants quickly pointed out that the SEC has not yet approved the individual S-1 statements from each issuer, a process that could take weeks or months. This delay, among other factors, is hindering Ether’s performance, including the network’s stagnant growth, relatively high transaction fees, and regulatory uncertainty in the U.S.

Some of the recent profit-taking likely resulted from the anticipation of the spot ETF’s approval, which triggered a 23% rally on May 20, an event often termed “sell the news.” Traders bought ETH expecting the official announcement, especially after the SEC reportedly urged exchanges like the NYSE and Nasdaq to expedite their 19b-4 filings on May 20.

Despite the hype surrounding the spot ETF approval, Ether remains 24% below its all-time high of $4,868 from November 2021, indicating that the enthusiasm was insufficient to propel Ether’s market capitalization beyond the current $445 billion. Notably, Bitcoin (BTC) is trading just 7% below its all-time high from March 2024, suggesting that other factors are constraining Ether’s performance.

Ethereum network metrics show no signs of improvement

Over the past 30 days, the Ethereum network’s usage metrics have shown a lack of growth in decentralized applications (DApps) volumes and deposits.

Ethereum network TVL excluding liquid staking, ETH terms. Source: DefiLlama

The total value locked (TVL) in the Ethereum network declined by 6% after reaching a peak of 18.3 million ETH on May 16. This metric does not consider DApps that do not require a large deposit base, such as non-fungible token (NFT) marketplaces, games, social networks, and collectibles. A detailed…

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