ETH Merge Fueling ETH Security Concerns, Spot ETF Hopes in Limbo

Following the Ethereum Merge, SEC Chair Gensler labeled ETH as a security due to its transition to Proof-of-Stake (PoS). This classification raises uncertainty for the future of an ETH-spot ETF market, with analyst Eric Balchunas estimating a 25% probability of approval despite a lack of positive signs. However, hopes for an ETH-spot ETF remain, exposing ETH to market-related news and chatter.

Ethereum Merge Implications for ETH Security Classification and Spot ETF Prospects

Following the Ethereum Merge's transition to Proof-of-Stake (PoS), SEC Chair Gary Gensler has designated ETH as a security. This classification has cast uncertainty over the future of an ETH-spot exchange-traded fund (ETF) market.

Despite the SEC's classification, optimism for an ETH-spot ETF approval persists, albeit with tempered expectations. Eric Balchunas, an ETF analyst at Bloomberg Intelligence, maintains a 25% probability of approval but acknowledges a lack of positive signals or concrete engagement from regulators.

Previously, Gensler cautioned against interpreting the SEC's approval of Bitcoin-spot ETFs as a harbinger of broader approval for crypto-spot ETFs. Nevertheless, hopes for an ETH-spot ETF market remain alive, exposing ETH to market-related news and commentary.

Technical Analysis

Bitcoin Analysis

BTC remains above its 50-day and 200-day exponential moving averages (EMAs), reinforcing bullish price momentum. A breakout above Tuesday's high of $71,570 would potentially propel BTC towards its March 14 all-time high (ATH) of $73,808. A decisive move beyond this level could inspire further bullish sentiment, targeting $75,000.

ETF market flow data remains a key focus on Wednesday. However, a decline below the $69,000 support level could invite a bearish push towards $64,000.

The 14-day relative strength index (RSI) reading of 60.06 indicates that BTC has room to regain its ATH before entering overbought territory.

Conclusion

While the SEC's classification of ETH as a security presents challenges for spot ETF approval, the possibility of regulatory acceptance lingers. The technical outlook for BTC remains positive, with potential for further upside if it sustains its current momentum.