As the cryptocurrency market braces for another potentially volatile weekend, more than half a billion dollars in Ether (ETH) long positions are at risk of liquidation should the digital currency replicate the price fluctuations observed last weekend. This vulnerability in positions comes amid increasing concerns over the potential rejection of spot Ether exchange-traded fund (ETF) applications by the U.S. Securities and Exchange Commission (SEC) in May.
Recent Price Volatility in Ether
Ether has been subject to significant price swings over recent weekends. According to CoinMarketCap, Ether is currently trading at $3,134. Notably, on April 20, Ether’s price momentarily dipped by 2.25% to $3,036. The preceding Saturday, April 13, witnessed a near 9% fall to $2,950, although it later rebounded to $3,075.
Potential Impact of Price Movements
If Ether undergoes a similar downturn this coming weekend, substantial liquidations could occur. A mere 2.25% decrease from its current price could trigger liquidations worth approximately $510 million, as per data from CoinGlass. Moreover, a sharper drop similar to the 9% decrease observed the previous weekend could escalate to liquidations amounting to $853 million.
Broader Market Concerns
The looming threat of liquidations coincides with broader uncertainties facing Ethereum, particularly regarding the status of spot ETF applications. A report from Cointelegraph on April 24 highlighted expectations among U.S. issuers and other firms that the SEC might reject these applications in May, following recent meetings with the regulator. Participants from these meetings indicated that the discussions have been largely one-sided, with SEC staff providing little detail about the proposed products.
Legal Challenges Facing Ethereum
Adding to Ethereum's challenges, on April 25, software development company Consensys filed a lawsuit against the SEC and its five commissioners. The lawsuit claims that the SEC plans to regulate ETH as a security, further complicating the regulatory landscape for Ethereum and potentially impacting its market dynamics.
As these developments unfold, investors and stakeholders in the Ethereum market are closely monitoring the situation, given the substantial financial implications tied to the SEC’s upcoming decisions and the inherent volatility of the cryptocurrency market.
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