Data shows that exchanges have seen a lot of long-term liquidations pile up following the approval of the Ethereum ETF, which was a news selling event.
Ethereum price falls after spot ETF approval
Yesterday, the U.S. Securities and Exchange Commission (SEC) finally gave approval to all eight Ethereum spot exchange-traded funds (ETFs) that were awaiting approval.
A spot ETF is essentially an investment vehicle that provides a way to gain indirect exposure to the price fluctuations of ETH without actually owning the tokens.
ETFs are available through vehicles that traditional investors will be familiar with, so those who don’t want to bother with cryptocurrency exchanges and wallets can decide to invest in the asset through them.
The market was anticipating this event as well as the approval of the Bitcoin spot ETF last January. In the case of BTC, inflows through ETFs eventually triggered a rally towards a new all-time high (ATH).
However, when the Bitcoin ETF was approved, investors initially reacted by selling, resulting in a significant decline for the cryptocurrency.
The Ethereum spot ETF approval also appears to have seen some selling so far, as coins in the sector have been in the red over the past 24 hours. Ethereum itself fell more than 5%.
The price of the asset appears to have shot up over the last few days | Source: ETHUSD on TradingView
Despite the downturn, Ethereum investors will still be holding on to notable gains. This is because the coin, at its current price of $3,700, has risen more than 23% in the past week as well.
The approvals and subsequent selling appear to have caught the market off guard, as the derivatives side registered some large liquidations in the last 24 hours.
$384 million worth of cryptocurrency contracts liquidated in the past day
According to data from CoinGlass, the cryptocurrency derivatives market has observed massive flushes over the past day. The table below shows what the numbers look like.
The data for the cryptocurrency-related liquidations over the last 24 hours | Source: CoinGlass
As seen, over $384 million worth of cryptocurrency contracts were forced to terminate during this period. More than $297 million of these liquidations involved long-term holders.
This means that investors betting on an optimistic outcome accounted for 77% of the flushes. This is a natural coincidence, as overall price volatility over the past day has been trending downward.
As can be seen in the heatmap below, it is not surprising that Ethereum, which has been the focus of attention recently, has accounted for the lion’s share of this liquidation pressure.
Looks like ETH liquidations have been more than double that of BTC's | Source: CoinGlass
With over $150 million in liquidations, Ethereum significantly outperformed Bitcoin, resulting in $74 million worth of contracts being liquidated.
Kanchanara from Unsplash.com, featured image from CoinGlass.com, chart from TradingView.com