Ethereum ETF approval fails to ignite crypto market, sparking $400 million in losses Ethereum ETF approval fails to ignite crypto market, sparking $400 million in losses
Some market analysts opined that the Ethereum ETF approval was a sell-the-news event.
2 min read
Updated: May. 24, 2024 at 10:52 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The broader crypto market experienced significant volatility during the past day as the US Securities and Exchange Commission approved several spot-based Ethereum exchange-traded funds (ETFs).
CryptoSlate data shows that the top 20 digital assets by market capitalization, excluding stablecoins like Tether’s USDT and Circle’s USDC, saw losses exceeding 3% each. Bitcoin and Ethereum, the top two digital assets by market capitalization, fell to $67,051 and $3,671, respectively.
Several market analysts have suggested that the ETH ETF approval was a “sell-the-news” event. Investors who anticipated the approval had already positioned themselves accordingly. During the past week, ETH’s price had risen by more than 20%, with CryptoSlate observing that the Ethereum futures market hit a one-year high of 3.6 million ETH.
Julio Moreno, head of research at CryptoQuant, noted:
“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.”
Some experts also pointed to the ETFs’ delayed launch as one of the reasons for the muted market performance. The SEC has only approved the ETFs and has yet to grant them the clearance to launch, which requires an approved S-1 filing, though this is more of a formality.
Bloomberg’s ETF analyst James Seyffart explained:
“This is just 19b-4 approval. Also needs to be an approval on the S-1 documents which is going to take time. We’re expecting it to take a couple weeks but could take longer.”
Over $400 million liquidated
Over 107,000 crypto traders suffered losses exceeding $400 million due to the market’s subdued performance.
Coinglass data reveals that ETH long traders, who expected the ETF news to boost the digital asset price, 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.
Meanwhile, Bitcoin traders lost approximately $75 million during the same period.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Ethereum
$3,349.42
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Binance
Binance is a global cryptocurrency exchange that provides a platform for trading more than 100 cryptocurrencies.
James Seyffart is a well-regarded analyst at Bloomberg Intelligence, specializing in Exchange-Traded Funds (ETFs) and the broader fund industry.