Ethereum could potentially encounter a significant loss of over $500 million through the liquidation of long positions in the futures market if it experiences similar price volatility as it did last weekend. This development arises at a time when there are growing concerns about the rejection of an application for an Ethereum spot ETF fund by the U.S. Securities and Exchange Commission (SEC) next month.
Pay Attention to This Process for Ethereum
Based on CoinMarketCap data, Ethereum is currently trading at $3,134. Recent weekends have witnessed an increase in Ethereum’s price volatility, followed by a swift rebound to fundamental support levels.
On April 20th, the price briefly dropped by 2.25% to $3,036, and on the preceding Saturday, April 13th, it fell by roughly 9% to $2,950 before recovering to $3,075. If this pattern repeats itself this weekend, Ethereum could face a substantial risk of liquidation.
According to data from CoinGlass, a blockchain data analytics firm, a similar 2.25% drop at current prices could result in $510 million in losses from the liquidation of long positions in the futures market. Meanwhile, a more pronounced drop resembling the previous weekend’s 9% decline 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 coincides with broader uncertainties surrounding Ethereum’s legal challenges and the status of spot ETF applications. As of April 24th, U.S. issuers and other firms who attended recent meetings anticipate that the SEC will reject spot Ethereum ETF applications next month.
The meetings between issuers and the SEC were one-sided, with the agency’s staff failing to address significant details of the proposed products. Furthermore, on April 25th, it was disclosed that software development company Consensys has 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 does not constitute investment advice. Investors should be aware that cryptocurrencies are highly volatile and carry inherent risks, and they should conduct their own research.