In a bold move reflecting rising interest in Layer-1 altcoins, 21Shares, a major digital asset manager with over $10 billion in assets under management, has officially filed with the U.S. Securities and Exchange Commission (SEC) to introduce a spot exchange-traded fund (ETF) tied to Sui (SUI), a blockchain platform known for its speed and scalability. The filing places 21Shares as the second entity seeking regulatory approval for a spot SUI ETF, following a similar submission by Canary Capital in March.

As outlined in the SEC S-1 form, Coinbase will serve as the custodian for the proposed ETF, ensuring secure storage of underlying assets. Unlike in-kind redemptions, the ETF will handle share creation and redemptions in cash, a structure designed to simplify fund operations and regulatory compliance.

Beyond the ETF application, 21Shares has also introduced a strategic partnership with the Sui Foundation aimed at accelerating global adoption. The partnership includes collaborative efforts across product development, research, and broader ecosystem growth. Duncan Moir, President of 21Shares, emphasized the company’s early conviction in Sui’s long-term potential, noting, “Since our earliest research into Sui, we believed it could become one of the most exciting blockchains in the industry, and we’re seeing that thesis play out.”

The news initially fueled a 9% intraday surge in SUI’s price on Thursday. However, the rally quickly faded as broader market dynamics took over, with Bitcoin’s dominance climbing to 64.8%, dragging down many altcoins in its wake. At the time of writing, SUI is consolidating around $3.50—significantly above its April lows but still short of the psychological $4 resistance level.

Despite the promising ETF development, SUI’s bullish momentum appears to be waning in the short term. After gaining over 100% in April, the altcoin has entered a consolidation phase, hovering above its 200-day moving average. This level now acts as crucial support, and maintaining price action above it could allow bulls to regroup and attempt another push toward the $4 mark.

However, underlying network data paints a more cautious picture. The number of active Sui addresses, which rebounded sharply from 1.3 million to nearly 2 million in April, has now dropped steeply. According to on-chain metrics, daily active accounts declined to just 1.1 million entering May—a 45% plunge in user activity. This stark drop in engagement raises concerns that the rally may lose steam unless a renewed surge in network usage supports further gains.

The decline in activity also coincides with broader market conditions favoring Bitcoin, as institutional capital appears to be consolidating around BTC amid ETF speculation and macroeconomic shifts. This pattern often sidelines smaller altcoins like SUI unless a catalyst—such as the approval of the ETF application—injects fresh momentum.

Still, Sui remains fundamentally strong, backed by notable institutional interest and an expanding ecosystem. The 21Shares partnership signals growing confidence in the blockchain’s long-term prospects and positions it favorably among other Layer-1 competitors.

Looking ahead, the key levels to watch for SUI include the $3.50 support zone and the $4 resistance. A successful hold above the 200DMA, combined with a rebound in address activity, could set the stage for a breakout. Conversely, continued weakness in network metrics may lead to further price consolidation or even a pullback if bullish conviction fades.

While it remains uncertain how quickly the SEC will respond to the ETF application, the statement adds Sui to the growing list of altcoins vying for institutional recognition in the U.S. ETF race. Whether this will translate into sustained price appreciation depends largely on broader market sentiment and a resurgence in on-chain activity.