Ethereum surges as SEC ends probe. What's next for ETH traders?

Ethereum (ETH) has surged by about 4.5% over the past 24 hours, reaching $3,550 on 19 June. This bullish movement is largely influenced by the recent actions of the US Securities and Exchange Commission's (SEC), as well as robust market dynamics. Breaking through the $3,500 mark has invigorated investor sentiment and marked a new phase of bullish momentum for the second-largest cryptocurrency by market capitalisation.

End of SEC probe boosts confidence

A critical factor behind Ethereum's recent surge is the conclusion of the SEC probe into Consensys, creator of the MetaMask wallet and a major player in the Ethereum ecosystem. In a blog post, Consensys confirmed that the SEC has decided not to pursue any enforcement action against Consensys regarding the classification of ETH as a security. This decision has alleviated a significant source of regulatory uncertainty that has loomed over Ethereum for years.

The end of the SEC investigation signals a positive regulatory outlook for Ethereum. This contrasts sharply with the challenges faced by other cryptocurrencies, most famously Ripple (XRP), which have been scrutinised as potential securities. This regulatory clarity has been welcomed by investors and market participants, as it reduces the perceived risks associated with holding and trading ETH.

Ethereum's price rose over 3% to break through the $3,500 level, a significant psychological and technical resistance point. This price movement reflects growing investor confidence and renewed buying interest in Ethereum. The upward trend is further supported by increasing ETH trading volumes and on-chain activity.

The SEC letters

The SEC conveyed its decision via letters sent to ConsenSys' legal representatives on Tuesday, titled "Re: In the Matter of Ethereum 2.0 (C-08950)."

One of the letters stated, "We have concluded the investigation in the above-referenced matter. Based on the information we have as of this date, we do not intend to recommend an enforcement action by the Commission against your client, Consensys Software Inc." However, the letter also noted that the conclusion of the investigation does not guarantee that enforcement action will never occur in the future.

"The Commission instructs its staff that in cases where such action seems appropriate, it may inform a person under inquiry that the formal investigation has ended. This discretionary action should not be construed as exoneration or an assurance that no future action will result from the staff's investigation of the matter," the letter explained, referencing a Wells Notice explainer on the SEC website.

A second letter reiterated the conclusion of the investigation while also noting that the SEC did not agree with any factual statements or legal conclusions made by Consensys' attorneys in a letter querying ETH's status as a security, given the SEC's approval of certain spot Ether exchange-traded fund applications.

"The Enforcement Division of the SEC has notified us that it is closing its investigation into Ethereum 2.0," Consensys said in a 19 June post on X (formerly Twitter).

"This means that the SEC will not bring charges alleging that sales of ETH are securities transactions," which the firm hailed as a "major win for Ethereum developers, technology providers, and industry participants."

Consensys said the SEC's decision came after it sent a letter to the agency on 7 June asking if it would end its investigation into Ether as the regulator approved spot ETH exchange-traded funds (ETFs) in May, which the firm said was "premised on ETH being a commodity."

The future of Ethereum: technical upgrades, growing user base, and spot ETFs

The SEC's decision highlights Ethereum's importance in the crypto ecosystem. As a financial instrument that cannot be easily pigeonholed into the role of security, Ethereum still forms the foundation of the technological applications of blockchain and cryptocurrency for finance, entertainment and industry.

Unlike Bitcoin (BTC), which dominates the crypto market despite being essentially unchanged from its creation, Ethereum is continuously developing and improving, increasing its appeal for investors who wish to stake a claim in emerging technologies.

The next update

Ethereum's transition to Ethereum 2.0 marked enhancements to scalability, security, and energy efficiency. The network shifted from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism, reducing energy consumption and increasing transaction throughput.

The next major update to Ethereum is referred to as the "Pectra" upgrade and combines two separate upgrades:

• The Prague upgrade, which focuses on changes to the network's execution layer.
• The Electra upgrade, which impacts the consensus layer. 

Scheduled to go live in the first quarter of 2025, the Pectra upgrade follows the Dencun upgrade from March 2024. The Dencun upgrade, a hard fork of Ethereum, aimed to lower transaction fees for layer-2 solutions and enhance scalability. The Pectra upgrade continues this trajectory, promising additional features to improve the Ethereum user experience.

The Ethereum development community views the Pectra upgrade as a significant yet incremental step forward, with larger updates like Verkle trees anticipated in future upgrades. Verkle trees promise to reduce proof sizes and lower hardware requirements for nodes, contributing to Ethereum's long-term scalability and user experience improvements.

Ethereum network continues to attract users

Despite a turbulent crypto market, Ethereum's Layer 1 and Layer 2 networks surpassed 25 million monthly active users on 18 June. This milestone highlights Ethereum's sustained relevance, even as competitors like Solana gain traction with new projects and various meme coins disrupt the market.

Additionally, the total value locked in Ethereum's Layer 2 and 3 projects exceeds $43.99 billion, driven by significantly reduced transaction fees, which have dropped from $18 to $3 over the past year, fostering increased adoption among developers and interest from traders.

Spot Ethereum ETFs and new financial instruments

The US Securities and Exchange Commission (SEC) approved the sale of spot Ether Exchange-Traded Funds (ETFs) in the United States on 23 May 2024.

Bloomberg analyst Eric Balchunas expects Ether ETFs to commence trading on 2 July. Additionally, reports from crypto analysis firm K33 Research forecast that these investment products will draw in $4 billion in inflows within the initial five months, highlighting a robust demand for ETH tokens in the near future.

Trade Ethereum and more with StormGain

Ethereum's recent breakthrough past $3,500, coupled with the conclusion of the SEC's probe without enforcement action, marks a pivotal moment for the cryptocurrency. This regulatory clarity, along with ongoing technological upgrades and increasing institutional interest, sets the stage for sustained growth and innovation within the Ethereum ecosystem.

As Ethereum continues to evolve and solidify its position in the market, investors and developers are likely to see enhanced opportunities and reduced risks. The end of the SEC probe is a testament to Ethereum's resilience and regulatory compliance, bolstering its appeal as a leading digital asset in the rapidly expanding world of blockchain technology.

In the midst of these exciting market dynamics, traders and investors need a reliable platform to capitalise on opportunities. Among all the options out there, StormGain stands out as a comprehensive trading platform, available on the web or via an easy-to-use smartphone app and designed to meet the needs of both novice and experienced traders.

Key features and benefits of StormGain include:

• User-friendly interface: Accessible for beginners and advanced enough for seasoned traders.
• Diverse trading instruments: Trade not only Ethereum but also other cryptocurrencies, tokenised stocks, and crypto indices.
• Integrated wallet: Securely store your digital assets with StormGain's integrated wallet.
• Competitive fees: Benefit from low trading fees to maximise your profits.
• Educational resources: Enhance your trading knowledge with articles, webinars, and a demo account to test strategies.
• 24/7 support: Access round-the-clock customer support for any trading inquiries.
• Passive income: Use StormGain's staking tools and integrated Bitcoin cloud miner to earn in the background while you trade.

There's never been a better time to register with StormGain and trade Ethereum and other top digital assets. Don't miss out on the exciting future of the crypto market. Take just a few seconds to sign up with StormGain now and start your trading journey!