Data indicates that a significant amount of long liquidations have accumulated on exchanges following the approval of the Ethereum ETF, which resulted in a sell-the-news reaction.
Ethereum Price Decreases After Spot ETFs Approval
Yesterday, the US Securities and Exchange Commission (SEC) finally approved all eight Ethereum spot exchange-traded funds (ETFs) that were awaiting authorization.
Spot ETFs are essentially investment vehicles that offer indirect exposure to ETH’s price movements without the need to own tokens directly.
ETFs are accessible through traditional investment avenues, allowing individuals who prefer not to engage with cryptocurrency exchanges and wallets to invest in the asset through these vehicles.
The market had been anticipating this event, similar to the approval of Bitcoin spot ETFs earlier in January. In the case of Bitcoin, the inflows through the ETFs eventually led to a rally towards a new all-time high.
However, when the Bitcoin ETFs were initially approved, investors reacted by selling, causing a significant decline in the cryptocurrency’s value.
A similar selling reaction seems to have occurred following the approval of Ethereum spot ETFs, as various cryptocurrencies have experienced losses in the past 24 hours. Ethereum itself has dropped by over 5% during this period.
The price of the asset appears to have risen significantly in recent days | Source: ETHUSD on TradingView
Despite the decline, Ethereum investors are still holding substantial profits, with the coin currently priced at $3,700, representing a 23% increase in the past week.
It seems that the approval and subsequent selling pressure caught the market off-guard, leading to significant liquidations in the derivatives sector over the past 24 hours.
$384 Million Worth of Cryptocurrency Contracts Liquidated in the Last Day
According to data from CoinGlass, the cryptocurrency derivatives market experienced a significant liquidation event in the previous day. The table below illustrates the numbers.
The data for cryptocurrency-related liquidations in the last 24 hours | Source: CoinGlass
As shown, over $384 million in cryptocurrency contracts were forcefully closed during this period, with more than $297 million of these liquidations involving long holders alone.
This indicates that 77% of the liquidations were from investors who were betting on a bullish outcome. This aligns with the overall downward price volatility observed in the past day.
Ethereum, which has been in the spotlight recently, contributed the most to this liquidation event, as depicted in the heatmap below.
ETH liquidations have surpassed those of BTC by a significant margin | Source: CoinGlass
Ethereum has witnessed liquidations totaling over $150 million, surpassing Bitcoin’s $74 million worth of liquidated contracts.
Featured image from Kanchanara on Unsplash.com, CoinGlass.com, chart from TradingView.com
