The recent approval of Spot Ethereum ETFs by the SEC hasn't triggered the anticipated surge in Ethereum's (ETH) price, puzzling many in the crypto community. While this development was expected to ignite a significant rally for the second-largest cryptocurrency, ETH has failed to see a substantial uptick in its value.

Factors Behind the Lackluster Performance

One potential reason for the subdued reaction could be that the news of potential approval was already factored into ETH's price. Earlier in the week, Bloomberg analysts Eric Balchunas and James Seyffart raised the odds of approval from 25% to 75%, leading to a nearly 20% surge in ETH's price. This scenario may have prompted a 'sell the news' event, with traders capitalizing on earlier investments and taking profits.

Additionally, Ethereum whales reportedly accumulated over 110,000 ETH ($341 million) between May 19 and 20, positioning themselves ahead of the expected approval news. Such pre-emptive buying might have contributed to the lack of a significant price rally post-approval.

Comparatively, Bitcoin (BTC) experienced a similar drawdown following the approval of Spot Bitcoin ETFs. Furthermore, unlike Bitcoin ETFs, which commenced trading immediately after approval, Spot Ethereum ETFs are yet to start trading. The SEC has greenlit the exchange filings (19b-4s), but the registration filings (S-1s) still require approval before trading can commence.

The delay in trading initiation could also be dampening the positive market sentiment for ETH. Investors might be awaiting approval of the registration filings, a process that could take weeks or even months, before anticipating another price surge for Ethereum and other altcoins.

Despite these challenges, ETH has witnessed a notable 28% increase in value over the past seven days, a noteworthy achievement considering its recent underperformance compared to other major-cap cryptocurrencies.

Bullish Signals Amidst the Setback

The approval of Spot Ethereum ETFs offers a silver lining, indicating that the SEC does not categorize ETH as a security, contrary to previous speculations. TuongVy Le, General Counsel at Anchorage Digital, highlighted that funds predominantly comprised of securities typically register through Form N-1A or N-2, rather than Form S-1.

This distinction suggests that if the SEC considered ETH a security, it would have likely rejected the S-1 filings by fund issuers like BlackRock, as these Ethereum ETFs will predominantly hold ETH as their primary asset.

Despite the tepid response to the ETF approval, ETH continues to trade around $3,803, according to CoinMarketCap, reflecting resilience amidst market uncertainties.