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Traders have increased their short positions on Ether after Grayscale Investments withdrew its application for an Ethereum futures exchange-traded fund (ETF). This trend coincides with the cryptocurrency hovering near a critical support level at $3,010, following a 1.85% decrease in price over the past 24 hours, according to CoinMarketCap data.
Should the price of Ether rebound by 3%, it could trigger liquidations totaling $345 million in short positions. Conversely, a 3% drop to $2,920 would wipe out $237 million in long positions. Grayscale’s decision to pull its application came just weeks before the U.S. Securities and Exchange Commission (SEC) was scheduled to decide on it.
The uncertainty surrounding Ether’s classification as a security and the fate of spot Ether ETF applications later in May have contributed to market unease. Although there was initial optimism about a potential spot Ether ETF approval, the impending May 23 deadline has led analysts to cast doubt on the likelihood of approval.
Market sentiment echoes these concerns, with the majority of participants on the crypto predictions platform Polymarket believing that spot Ether ETFs will be denied. Broader concerns include Ethereum’s limited usage and the lack of speculative interest from short-term holders.
Despite these challenges, some traders remain hopeful about Ether’s potential. Prior to the recent news, there were predictions of a breakout by the end of 2024. This optimism is rooted in historical patterns and the current falling wedge pattern, suggesting potential sideways movement around the support zone.
In summary, the crypto market faces a period of uncertainty as traders speculate on Ether’s future trajectory. Grayscale’s ETF withdrawal has intensified short-selling, but a rebound in Ether’s price could prompt significant liquidations and shift market dynamics.