Ethereum faces the potential of losing over $500 million in long position liquidations in the futures market if it experiences the same price volatility as it did last weekend. This concern arises as there is growing speculation that the U.S. Securities and Exchange Commission (SEC) may reject an application for an Ethereum spot ETF fund next month.
Take Note of the Ethereum Process
According to CoinMarketCap data, Ethereum is currently trading at $3,134. In recent weekends, there has been an uptick in price volatility for Ethereum, followed by a quick recovery to key support levels.
On April 20th, the price briefly dropped by 2.25% to $3,036, and on the previous Saturday, April 13th, it fell by approximately 9% to $2,950 before bouncing back to $3,075. If this pattern repeats itself this weekend, Ethereum could face a significant risk of liquidation.
Based on data from CoinGlass, a blockchain data analytics firm, a 2.25% drop at current prices could result in $510 million in losses from long position liquidations in the futures market. Additionally, a more drastic drop similar to the 9% decrease experienced last weekend could wipe out $853 million from the market.
What’s Happening with the Ethereum ETF Process?
The potential surge in liquidations in the futures market comes amidst broader uncertainties surrounding Ethereum’s legal challenges and the status of spot ETF applications. As of April 24th, issuers and other firms involved in recent meetings anticipate that the SEC will reject applications for spot Ethereum ETFs next month.
The meetings between issuers and the SEC were one-sided, with the agency’s staff failing to address significant details regarding the proposed products. Furthermore, on April 25th, it was revealed that Consensys, a software development company, filed a lawsuit against the SEC and its five commissioners, alleging plans to regulate Ethereum as a security.
Disclaimer:
The information provided in this article should not be considered as investment advice. Investors should be aware of the high volatility and associated risks of cryptocurrencies and should conduct their own research.
