Ethereum ETF Approval Sees Small Decline in Broad Market, $400M in Liquidations
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After the dust settled around the SEC's approval of Ethereum ETFs, the crypto market showed high volatility. Data from CoinGecko shows that the top 20 digital assets (by market capitalization, excluding stablecoins) each saw losses of about 3%.
Broadly speaking, Bitcoin (BTC) and Ethereum (ETH) saw declines of 3.4% and 3.5%, respectively. BTC is currently playing at $67.3K, while Ethereum is trading at $3.6K on the street. As of this writing, liquidators on the market have seen spending of nearly $400 million.
The market's underperformance resulted in more than 107,000 crypto traders losing more than $400 million. According to Coinglass Liquidity, ETH long traders who had expected ETF news to boost the digital asset's value bore the brunt of these losses, totaling around $107 million.
The largest single liquidation was a $12.4 million long bet on Ethereum on the Binance exchange. Bitcoin traders also lost about $75 million during the same period.
Julio Moreno, head of research at CryptoQuant, said the market had sold off at the Ethereum spot ETF approval price, reflecting a decline in the price between grayscale ETHE and ETH in the days leading up to the decision.
Seems like the market has already priced the Ethereum spot ETF approval.
Grayscale's ETHE discount to ETH has significantly narrowed in the last few days.
The same happened between GBTC and Bitcoin as the Bitcoin Spot ETF approval was nearing. pic.twitter.com/EocrSnkj8z
— Julio Moreno (@jjcmoreno) May 23, 2024
This analysis suggests that the ETH ETF approval is a “sell-the-news” event, with investors anticipating the approval's position accordingly. Notably, the Ethereum futures market hit a one-year high of 3.6 million ETH when the ETH price surged by nearly 21% last week.
A muted market performance was also attributed to the ETF's late launch. When the SEC approves ETFs, they still have to issue a license to launch, which requires an approved S-1 filing, though this is considered standard. Bloomberg EFF analyst James Seifert said the S-1 approval process could take two weeks or more.
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