Ether traders have increased their short positions in the past 24 hours as Grayscale Investments withdrew its application for an Ethereum futures exchange-traded fund (ETF). According to CoinMarketCap data, Ether (ETH) is currently near a crucial support level at $3,010, having declined by 1.85% in the last day. However, liquidation maps indicate that traders are more convinced that the price will decrease in the near future, with $345 million in short positions at risk of liquidation if the price rises by 3%. Conversely, a 3% drop to $2,920 would only result in $237 million in long positions being wiped out.
This development follows Grayscale’s decision on May 7 to withdraw its Ether futures ETF application just three weeks before the United States Securities and Exchange Commission (SEC) was scheduled to make a decision. There is also speculation regarding whether Ether will be classified as a security and the fate of spot Ether ETF applications later in May. Analysts and members of the crypto community are increasingly skeptical about the likelihood of the SEC approving a spot Ether ETF as the May 23 deadline approaches. According to Polymarket, a crypto predictions platform based in New York, 92% of participants believe that spot Ether ETFs will be denied.
There are additional concerns about Ethereum’s overall usage and the lack of speculative interest from short-term holders (STH). On-chain analyst James Check, also known as “Checkmatey,” highlighted in a post on X on May 7 that Ethereum’s usage is currently so low that its burn mechanism is not keeping up with issuance to validators. Glassnode also stated on May 8 that Ether’s underperformance compared to Bitcoin (BTC) in this market cycle is due to a measurable lag in speculative interest from the STH cohort.
Despite these concerns, some traders were optimistic about a potential breakout in Ether’s price by the end of 2024. Pseudonymous trader Ash Crypto expressed this sentiment to his 1.1 million followers on May 6, citing a similar fractal pattern from Q4 of 2020. Meanwhile, pseudonymous crypto commentator TheCryptoPalace informed their 20,400 X followers on May 1 that Ethereum is currently within a falling wedge pattern and may experience sideways movement around a significant support area.
It is important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and analysis before making any investment or trading decisions as they involve inherent risks.