Ethereum ETF approval expectations heat up, why is the market reaction cold?
Recently, expectations about the possible approval of Ethereum spot ETFs have been heating up.
It is reported that the U.S. Securities and Exchange Commission (SEC) may approve the product before July 4, and several asset management companies such as BlackRock, VanEck, Franklin Templeton and Grayscale are actively seeking approval.
These companies have completed most of the revisions to the issuance documents and expect the approval process to take no more than two weeks.
Bloomberg's ETF analyst Eric Balchunas predicts that the Ethereum spot ETF may be approved as early as July 2.
In theory, this is a major positive news for the cryptocurrency market.
However, the market's reaction was unexpectedly cold, and even prices fell instead of rising. The reasons behind this are worth our in-depth exploration.
First, there is an important difference between market expectations and actual results. In financial markets, expectations usually have a greater impact on prices than actual events.
When the market generally expects a good news, investors may act in advance, driving asset prices up.
However, once good news is implemented, the market often enters the so-called "buy expectations, sell facts" stage, that is, investors will sell their holdings to make a profit.
This may lead to a price correction even if the news is good.
Second, the market's expectations for the approval of the Ethereum ETF may be overly optimistic.
Although the approval of the ETF will undoubtedly increase the liquidity and market attention of Ethereum, the market may have already reflected this expectation in the current price.
Therefore, when the approval actually comes, market participants may be more inclined to take profits at high levels rather than further push up prices.
In summary, although the approval of the Ethereum ETF will have a positive impact on the market, the market's cold reaction may be due to the expectation effect and overly optimistic expectations.
Investors need to carefully evaluate the market reaction and the possibility of expectation adjustment to better understand and respond to market dynamics.
