Ethereum Spot ETF Approval Triggers Long Liquidations Amid Price Drop

Following the approval of Ethereum spot ETFs, significant long liquidations have accumulated on exchanges, indicating a "sell-the-news" reaction.

Ethereum's Price Declines After Spot ETF Approval

The U.S. Securities and Exchange Commission (SEC) recently approved all eight pending Ethereum spot exchange-traded funds (ETFs). These ETFs allow investors to gain exposure to ETH’s price movements without owning the actual tokens.

While ETFs offer a familiar investment method for traditional investors avoiding crypto exchanges and wallets, the market's anticipation mirrored the response to the Bitcoin spot ETF approval in January. However, like Bitcoin’s initial reaction, Ethereum has seen a selloff post-approval, with its price dropping over 5% in the past 24 hours, although it remains up 23% for the week.

This unexpected approval and subsequent selloff have led to significant liquidations in the derivatives market. Data from CoinGlass shows that $384 million in cryptocurrency contracts were liquidated in the past day, with $297 million involving long positions, comprising 77% of the total liquidations.

Ethereum, being the recent focus, accounted for the largest share, with over $150 million in liquidations, outstripping Bitcoin’s $74 million.