Ethereum ETF approval expectations are rising, why is the market reacting coldly?

Recently, the approval expectations of Ethereum spot ETFs have been rising.

The U.S. Securities and Exchange Commission (SEC) may approve Ethereum spot ETFs before July 4, and the negotiations between relevant asset management companies and regulators are nearing completion. Eight asset management companies, including BlackRock, VanEck, Franklin Templeton and Grayscale, are actively seeking SEC approval. The companies said that the revision of the issuance documents has been basically completed, with only some minor adjustments left. A lawyer working with one of the issuing companies pointed out that only the final touches are left, and the approval process is expected to take no more than two weeks. Bloomberg ETF analyst Eric Balchunas previously predicted that the Ethereum spot ETF could be approved as early as July 2.

This is a major positive for the cryptocurrency market in theory. However, the market's reaction was unexpectedly cold, and even the price fell instead of rising. The reasons behind this are worth our in-depth exploration.

First, we need to understand the relationship between market expectations and actual results. In financial markets, expectations often have a greater impact on prices than actual events. When a potential good news is widely expected by the market, investors will act in advance, driving up asset prices. However, once the good news lands, the market tends to enter a stage of "buying expectations and selling facts", the so-called "good news realization". At this time, even if the good news comes true, the price may fall back because it has been fully reflected in the price before.

Second, the market may have overly optimistic expectations for the approval of the Ethereum ETF. Although the approval of the ETF will undoubtedly bring more liquidity and investor attention to Ethereum, the market may have already factored this expectation into the price. When the approval actually comes, market participants may choose to take profits at high levels instead of continuing to push up prices.

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