Key Points
The approval of Ethereum exchange-traded funds (ETFs) has resulted in an influx of long liquidations on exchanges. This is a typical sell-the-news event.
Ethereum’s Price Drop Post ETF Approval
Just recently, all eight Ethereum spot ETFs got the go-ahead from the US Securities and Exchange Commission (SEC). These ETFs serve as investment vehicles that allow investors to indirectly benefit from Ethereum’s price fluctuations without owning any tokens.
ETFs are accessible through traditional investment channels, making them an attractive option for those who prefer not to deal with cryptocurrency exchanges and wallets.
Similar to the Bitcoin spot ETF approval earlier this year, the market had been eagerly anticipating this event. When Bitcoin ETFs were first approved, there was an initial selling reaction from investors, which led to a significant drop in the cryptocurrency’s price.
The approval of Ethereum spot ETFs has also been followed by some selling, as indicated by the red market trend over the last 24 hours. Ethereum itself has seen a decrease of over 5%.
Despite the drop in Ethereum’s price, investors are still making substantial profits. The current price of Ethereum, at $3,700, reflects a 23% increase over the past week.
The approval and subsequent sell-off seem to have taken the market by surprise. The derivatives side has seen large liquidations in the past 24 hours.
Massive Liquidation in Cryptocurrency Contracts
Data from CoinGlass shows that the cryptocurrency derivatives market has experienced a mass flush in the past day. Over $384 million in cryptocurrency contracts have been forcefully closed during this period, with more than $297 million of these liquidations involving long holders alone.
This means that investors betting on a bullish outcome made up 77% of the flush. This is consistent with the overall price volatility, which has been trending downwards in the past day.
Not surprisingly, Ethereum, which has been the center of attention recently, contributed the largest share to this liquidation squeeze. Ethereum liquidations exceeded $150 million, significantly outperforming Bitcoin, which saw contracts worth $74 million liquidated.
