Ether Traders Increase Short Positions Amid Grayscale's ETF Withdrawal and Market Concerns
Summary:
Ether traders have amplified short positions as the cryptocurrency nears a crucial support level while Grayscale Investments retracts its Ethereum futures ETF proposal. Anticipation of the ETH price decline coincides with broader industry concerns about Ethereum's low usage and speculative interest. Prior to these developments, some traders remained hopeful of a late-year price surge. No investment advice is contained in this article and readers are encouraged to perform their own research.
As Ether (ETH) neared a pivotal support level at $3,010, traders have noticeably amplified their short positions within a 24-hour window, running parallel to Grayscale Investments' withdrawal of its Ethereum futures exchange-traded fund (ETF) proposal. CoinMarketCap data reports the ETH price had declined by 1.85% within the past day. However, a study of liquidation charts indicates a stronger belief among traders that ETH's value will continue decreasing in the immediate future. $345 million in short positions are expected to be liquidated if the cryptourrency's value rises by 3%. Conversely, a 3% fall to $2,920 would only eliminate $237 million in long positions.
The rising anticipation of further declines in Ether's value appears to coincide with Grayscale's May 7 decision to retract its Ethereum futures ETF application, all while potential questions about Ethereum's classification as a security and the fate of spot Ethereum ETFs loom large this month. As we approach the decisive May 23 date, analysts who were previously optimistic are now increasingly sceptical.
Similar sentiments can be observed in the broader crypto community. According to Polymarket, a crypto predictions platform based in New York, a staggering 92% of participants are convinced that the spot Ethereum ETF will be refused next month.
Indicative of this are wider concerns relating to Ethereum’s overall application and a noticeable lack of speculative interest from short-term holders (STH). Cryptocurrency onchain analyst James Check, also known as “Checkmatey”, mentioned in a post dated May 7 that “Usage of Ethereum is currently so low, that their burn mechanism is not keeping up with issuance to validators."
Further to this, on May 8, Glassnode attributed Ethereum’s underperformance in this cycle compared to Bitcoin to a “measurable lag in speculative interest” from the STH group.
Meanwhile, prior to these developments, some traders were hopeful about an end-of-year price surge for ETH. Cryptotrader Ash Crypto had predicted on May 6 a resurgent pattern similar to Q4 of the year 2020 and subsequently, a potential breakout in Q3 of 2024. Another trader known as TheCryptoPalace had suggested on May 1 possible sideways movement within the falling wedge pattern that the Ethereum price is currently following.
Please note, this article doesn't provide investment advice or suggestions. Each investment or trading move carries risk. Readers are advised to perform their own research before making a decision.
Published At
5/8/2024 9:06:44 AM
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