Ethereum could be at risk of experiencing over $500 million in liquidations of long positions in the futures market if it undergoes the same price volatility as last weekend. This development comes at a time when there are growing concerns that the U.S. Securities and Exchange Commission (SEC) may reject an application for an Ethereum spot ETF fund next month.
Take Note of This Ethereum Process
According to CoinMarketCap data, as of now, Ethereum is being traded at $3,134. In recent weekends, there has been an increase in volatility in Ethereum’s price, followed by a quick recovery to fundamental 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 rising to $3,075. If this pattern repeats this weekend, there could be a significant risk of liquidation.
Based on data from blockchain data analytics firm CoinGlass, a similar 2.25% drop at current prices could result in $510 million in losses from liquidations of long positions in the futures market. Meanwhile, a more drastic drop resembling the previous weekend’s 9% could wipe out $853 million from the market.
What’s Happening with the Ethereum ETF Process?
The potential high volume of liquidations in the futures market comes amidst broader uncertainties regarding 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 recent meetings between issuers and the SEC were one-sided, with the agency’s staff failing to address significant details of the proposed products. Meanwhile, on April 25th, it was revealed that software development company Consensys 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 risks associated with cryptocurrencies and should conduct their own research.
