What are the implications of a U.S.-approved Ether ETF on the crypto market?

What are the implications of a U.S.-approved Ether ETF on the crypto market?

Ether ETF Hopes Drive Crypto Market Higher, Liquidate $260M in Shorts

Renewed hopes for a U.S.-approved ether exchange-traded fund (ETF) have sent the crypto market soaring, liquidating over $260 million in short positions.

The sudden rally began on Monday after Bloomberg analysts raised the probability of an ether ETF approval to 75%. The move higher accelerated on Tuesday, with ether surging over 19% to $3,700 and bitcoin (BTC) breaking above $71,000.

Market Liquidations

The price surge triggered a wave of market-wide short liquidations, with over $260 million in forced closures. Ether shorts accounted for the largest share, with over $115 million liquidated, followed by bitcoin shorts at $99 million.

Crypto exchange Binance processed the most liquidations, with over $130 million, followed by OKX at $118 million and Huobi at $51 million.

Bullish Outlook

Market participants see the potential approval of an ether ETF as a bullish event. ETFs provide investors with an easy and regulated way to gain exposure to crypto assets, potentially attracting institutional capital.

The spot bitcoin ETF, launched in January, has already attracted $12 billion in inflows. Some traders believe that an ether ETF could have a similar impact, driving prices higher.

Trader Expectations

Singapore-based trading firm QCP Capital expects ether prices to continue rising. “We believe it is unlikely that spot can settle here, with approval taking us closer to 4k and denial back to 3k,” the firm said in a broadcast.

SEC Update Request

Coindesk reported that the U.S. Securities and Exchange Commission (SEC) has asked aspiring ether ETF exchanges to update their 19b-4 filings ahead of a key deadline this week. This move is seen as a sign of imminent approval.

The potential approval of an ether ETF is a significant development for the crypto market. It could open the door to institutional investment and further legitimize the asset class.

By Deepika

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