ETH Price Surge Costs Ether Bears $11 Million Amid ETF Speculation
There is a strong likelihood, estimated at around 90%, that an ether futures ETF will be introduced in the opening week of October, as suggested by an analyst.
Over the past 24 hours, short positions in ether (ETH) underwent significant liquidation, a consequence of major financial institutions finalizing formal strategies to introduce ether futures ETFs in the United States.
The announcement of the upcoming listings of ether futures ETFs triggered a notable 5% surge in ether prices, accompanied by an almost 25% spike in trading volumes. By the afternoon hours in Asia on Friday, Ether was valued at $1,660, marking an increase of over 6% since Monday.
This surge in prices is likely attributed to the anticipation of swift regulatory approval, which could potentially lead to heightened demand for ether from traditional financial entities. Until now, such players have had limited avenues to engage in the trade of the second-largest cryptocurrency by market capitalization.
Bloomberg ETF analyst Eric Balchunas expressed a high degree of confidence, stating that the initiation of ether futures ETFs is "highly likely (90% odds) to commence in early Oct." He subsequently conveyed in a tweet that the U.S. Securities and Exchange Commission (SEC) is inclined to expedite the introduction of these futures, based on insider information.
While spot remains in limbo, Ether futures ETFs highly likely (90% odds) to start rolling out in early Oct. Valkyrie first (albeit with a btc + eth ETF) followed by dozen+ straight ether futures ETFs. Gonna be a wild race albeit w/ much lower stakes than spot via @JSeyff pic.twitter.com/no8kP5DTZt— Eric Balchunas (@EricBalchunas) September 27, 2023
However, this surge caught bearish traders off guard. Data from Coinglass reveals approximately $11 million in liquidations among traders of ether futures who had taken positions betting against the asset. This constituted nearly 85% of all ether liquidations that occurred on Thursday.
Liquidation takes place when an exchange forcibly closes a trader's leveraged position due to a partial or complete loss of the trader's initial margin. This occurs when a trader is unable to meet the margin requirements for a leveraged position or lacks sufficient funds to maintain the trade.
Among the various exchanges, OKX accounted for a third of the positions that were liquidated, followed by Binance and Huobi.
On Thursday, VanEck, a distinguished asset management firm overseeing assets totaling $77.8 billion, unveiled its preparations to introduce an ether futures ETF. This fund, named the VanEck Ethereum Strategy ETF (EFUT), will primarily channel investments into standardized, cash-settled ETH futures contracts that are traded on commodity exchanges duly registered with the Commodity Futures Trading Commission (CFTC). The ETF is scheduled for listing on CBOE.
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