Ether traders have increased their short positions in the past 24 hours, coinciding with Grayscale Investments’ withdrawal of its application for an Ethereum futures exchange-traded fund (ETF). The price of Ether (ETH) is currently near a critical support level of $3,010, having dropped 1.85% in the last 24 hours, according to CoinMarketCap data. However, liquidation data suggests that traders have more confidence in a downward movement in the near future, with $345 million in short positions at risk of liquidation if the price increases by 3%. Conversely, a 3% drop to $2,920 would only result in $237 million in long positions being wiped out.
This development follows Grayscale’s decision on May 7 to withdraw its application for an Ether futures ETF, just three weeks before the United States Securities and Exchange Commission (SEC) was scheduled to make a decision on it. It also comes at a time when there is speculation about whether Ether will be classified as a security and the fate of spot Ether ETF applications later in May. As the May 23 deadline approaches, analysts are increasingly skeptical about the SEC approving a spot Ether ETF, despite earlier optimism in the year. The sentiment among the crypto community aligns with this skepticism, with 92% of participants on the crypto predictions platform Polymarket believing that spot Ether ETFs will be denied.
There are also concerns about Ethereum’s overall usage and the lack of speculative interest from short-term holders (STH). James Check, a crypto on-chain analyst, pointed out that Ethereum’s usage is currently so low that its burn mechanism is unable to keep up with issuance to validators. Glassnode also noted that Ether has underperformed relative to Bitcoin (BTC) due to a lag in speculative interest from the STH cohort. However, prior to these developments, some traders were optimistic about a potential breakout in Ether’s price by the end of 2024, citing historical patterns.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and assessment of risks before making any investment or trading decisions.