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Ethereum Going Through Possible Liquidation Risks and ETF Hurdles – What Now?

Ethereum (ETH) could be facing over $500 billion in liquidations of long positions in the futures market if its volatility continues. 

 

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This situation arises from recent sharp declines in prices during the weekend, which could lead to additional extensive liquidations of long positions if the trend persists. 

According to CoinMarkeCap data at this time of writing, Ethereum (ETH) is trading at $3,153.10. Last weekend, there was a massive decline in Ethereum’s price, followed by a rapid recovery to fundamental support levels in the past few days. 

On Saturday, April 20th, Ethereum’s price dropped by 2.25% to $3,036 and the week before that, saw a decline of 9% to $2,950 before bouncing back to $3,075. If this pattern occurs every weekend, Ethereum may encounter a notable level of liquidation. 

As per CoinGlass data, a comparable 2.25% decline at present prices could result in $510 million in losses from liquidations of long positions in the futures market. In addition, a more massive drop similar to the 9% decline could wipe out $853 million from the market. 

Meanwhile, regulatory challenges loom, with the possibility of the US Securities and Exchange Commission (SED) rejecting the spot Ethereum ETF application next month. 

This decision holds significant importance as it could impact Ethereum’s credibility and market stability. Furthermore, the recent lawsuit filed by Consensys against the SEC, contesting the regulator’s intention to classify Ethereum as a security, introduces further complications to the legal framework surrounding Ethereum. 

As Ethereum struggles with both market volatility and increased regulatory issues, stakeholders in the crypto sector are urged to closely monitor these developments. The resolutions of these issues are expected to carry massive implications for Ethereum’s financial stability and its position within the broader financial market.

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Sophia Cruz
Financial Writer - Asian & European Desks
Sophia is an experienced writer, reporter and newsdesk member, mostly on the financial sectors. For the past 5 years Sophia has covered a wide variety of topics such as the financial markets, economics, technology, fin-tech and trading. Sophia has been a part of the FX Leaders team since 2017 and works on producing valuable content and information for traders of all levels of experience.
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