Factors include uncertainty over the launch of a spot Ethereum ETF, high open interest in ETF futures, and stagnant Ethereum network usage.

Ethereum Spot ETF Approved: Not Everything Goes As Expected

Some might say that spot ETF traders are still waiting for approval of each fund’s S-1 form. Eric Balchunas, senior ETF analyst at Bloomberg, expects the Ethereum spot instrument to begin trading on July 4, while his colleague James Seyffart noted that BlackRock’s May 29 updated S-1 shows that “issuers and the SEC are working to launch a spot Ethereum ETF.”

However, analysts suggest that ETH could come under pressure if the Grayscale Ethereum Trust (ETHE) experiences outflows in the weeks following its conversion to an ETF. Similar issues have plagued Grayscale’s Bitcoin Fund (GBTC) due to high fees. Some speculate that outflows from Grayscale ETHE alone could exceed $100 million per day in the first few weeks, offsetting or even outweighing inflows from new entrants.

Essentially, part of Ether’s failure to break through $3,900 resistance is due to the rally that preceded the spot ETF approval. Some investors were frustrated that it took longer to trade effectively, which also created some uncertainty and negative price impact. This could spell trouble, as Ether’s futures open interest rose to an all-time high on May 28.

For example, Chain’s 508,610 daily active addresses are more than four times that of Ethereum. These users have traded more than $3.5 billion on PancakeSwap in the past seven days, while a single DApp Move Stake has gathered more than 226,350 active addresses in the same period. In short, Ethereum’s on-chain metrics don’t inspire confidence, further limiting Ether’s potential to break through $3,900 in the near term.