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The crypto market was filled with euphoria over the past day with the approval of spot Ethereum ETFs by the U.S. Securities and Exchange Commission (SEC). This came after months of speculation on the possibility of Ethereum ETFs.
Despite the wave of joy that rippled across the crypto market, ETH’s spot market price responded sluggish with buyers unable to seize the bullish sentiment. ETH’s price traded between $3.5k and $3.9k during the time.
How will the ETF approval after Ethereum’s price action in the short and long term?
Blockhead
ETH Move Priced In Before ETF Approval
A look at the ETH price action on the four-hour timeframe showed that buyers could have seized the initiative, based on social sentiment to register a significant pump ahead of the approval.
On 20 May, ETH pumped 15% rising from $3.1k to $3.7k with the Relative Strength Index (RSI) noting the buying strength by rising to 93. Similarly, the Chaikin Money Flow (CMF) surged to a monthly high of +0.53.
However, the aftermath of the ETF approval showed profit taking moves with price dropping sharply below the $3.7k support level. This presents two trading plays for ETH, based on the short term and long term.
Short term, ETH could dip from $3.7k to $3.4k offering 6.6% profit opportunities. From the $3.4k support level, ETH could go on a strong upward move toward a new all-time-high (ATH) above $4k for 12% profit.
Open Interest Supports Short Term Bearish Outlook
Data from Coinalyze showed that market participants in the futures market leaned bearish in the short term with the Open Interest dropping by 3.49% over the past 24 hours.
Shorting ETH over the next few days could yield the best profit making opportunity on the altcoin before the Ethereum ETFs start trading, driving bullish sentiment in the long term.
Disclaimer: This article does not constitute trading, investment, financial, or other types of advice. It is solely the writer’s opinion. Please conduct your due diligence before making any trading or investment decisions.
