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• The SEC granted approval for spot Ethereum ETFs, yet Ether’s price remains stagnant.
• Persistent inflation fears may be hindering Ether’s price growth.
• Ethereum is trading at $3,840, unchanged since the ETF approval.

Despite the Securities and Exchange Commission (SEC) giving the green light to spot Ethereum exchange-traded funds (ETFs) last week, Ether’s price has struggled to rise. The second-largest cryptocurrency by market capitalization was recently trading at $3,840, the same level it was at when the approval was announced.

Several factors may be contributing to this unexpected price stagnation. According to Noelle Acheson, former head of market insights for Genesis Global Trading, one of the primary reasons for Ether’s price struggle is persistent inflation concerns.

Inflation Fears Weighing Down Ether

Acheson, in her newsletter “Crypto is Macro Now,” highlighted that like Bitcoin, Ethereum is highly sensitive to global macroeconomic forces. On the same day the SEC approved the Ethereum ETFs, the S&P Global’s purchasing managers’ index (PMI) was released, showing unexpectedly strong numbers. The PMI is an economic indicator that provides insight into the health of the manufacturing and services sectors.

The robust PMI numbers suggest that the US economy is expanding, with both the manufacturing and services sectors contributing to sustained inflation. This is problematic for cryptocurrencies like Bitcoin and Ethereum because high inflation typically leads to higher interest rates. The Federal Reserve has maintained relatively high-interest rates to combat inflation, which in turn discourages investment in riskier assets such as cryptocurrencies and tech stocks. Investors are more likely to opt for safer, high-yielding Treasury bonds under these conditions.

Impact of High-Interest Rates

High-interest rates are a double-edged sword for the crypto market. On one hand, they can deter investment in risk-on assets; on the other hand, they underscore the volatility and risk associated with such investments. As Acheson noted, the expectation is that interest rates will remain high for an extended period, pushing the prospect of lower rates further into the future. This environment is less conducive to a bull run in the cryptocurrency market.

Quinn Thompson, founder of crypto hedge fund Lekker Capital, also emphasized that significant gains in the crypto market are unlikely until the US dollar weakens, which is expected to happen when the Federal Reserve eventually cuts interest rates.

Crypto Market Movers

The broader cryptocurrency market has also experienced a downturn. Bitcoin has dropped 2.9% in the past 24 hours, trading at $68,000. Similarly, Ethereum has slumped 2.3% in the same period, maintaining its position at $3,840.

Looking Ahead

The approval of Ethereum ETFs was anticipated to be a major catalyst for a price surge in Ether, yet the market has shown that macroeconomic factors hold significant sway over digital asset prices. Inflation concerns and high-interest rates are major impediments that the crypto market must contend with.

Investors and market watchers are now focused on future economic data releases and Federal Reserve policy decisions. Until there are clear signals of easing inflation and potential rate cuts, Ether and other cryptocurrencies may continue to face headwinds.

In conclusion, while the approval of spot Ethereum ETFs by the SEC is a positive development, it has not resulted in an immediate price increase for Ether. Inflation concerns and high-interest rates are significant factors that are currently overshadowing this regulatory win. Investors will need to keep a close eye on macroeconomic trends to gauge the future performance of Ether and the broader cryptocurrency market.